Reference no: EM132608761

Question - Each fund must account for interfund activity as if it were a separate accounting entity.

The newly formed Buffalo School District engaged in the following transactions and other events during the year:

1. It levied and collected property taxes of $110 million.

2. It issued $30 million in long-term bonds to construct a building. It placed the cash received in a special fund set aside to account for the bond proceeds.

3. During the year, it constructed the building at a cost of $25 million. It expects to spend the $5 million balance in the following year. The building has an estimated useful life of 25 years.

4. It incurred $70 million in general operating costs, of which it paid $63 million. It expects to pay the balance early the following year.

5. It transferred $12 million from its general fund to a fund established to account for resources set aside to service the debt. Of this, $10 million was for repayment of the debt; $2 million was for interest.

6. From the special fund established to service the debt, it paid $2 million in interest and $6 million in principal.

7. It collected $4 million in hotel taxes restricted to promoting tourism. Since the resources were restricted, they were accounted for in a special restricted fund. During the year, the district spent $3 million on promoting tourism.

8. The district established a supplies store to provide supplies to the district's various departments by transferring $4 million from the general fund. It accounted for the store in an internal service (proprietary) fund. During the year, the store purchased (and paid for) $2 million in supplies. Of these, it "sold" $1 million, at cost (for cash), to departments accounted for in the general fund. During the year, these departments used all of the supplies that they had purchased.

Prepare journal entries to record the transactions and other events in appropriate funds. Assume that governmental funds are accounted for on a modified accrual basis and focus only on current financial resources (and thus do not give balance sheet recognition either to capital assets or long-term debts). Proprietary funds are accounted for on a full accrual basis.