Reference no: EM132806107

Question - The Village of Scarsdale (a local governmental body) sells a building for $1 million in cash to the Westchester County Red Cross Chapter (a Not-for-Profit Organization). Answer the following questions:

(1) Show the transaction as it would appear on the Village's modified accrual transaction sheet. Assume it is a General Fund transaction.

(2) The Village is legally required to transfer all of the proceeds to its Capital Projects fund for future building purchases. It only pays $800,000 in cash to the Capital Projects Fund. Show the transaction for both the General Fund and the Capital Projects Fund (specify in your answer which transaction is for which fund).

(3) Show the transaction of building sale as it would appear for the Red Cross.

(4) If the Red Cross borrowed money to buy the building, show the transaction of the first year's loan repayment of $150,000 ($100,000 interest and $50,000 principal).

(5) If the Village also took out a loan before, and had made a similar loan repayment of $150,000 ($100,000 interest and $50,000 principal) from the general fund, what would their expenditure for that repayment transaction have been? Explain.

(6) The Red Cross utilizes the straight-line method of depreciation for its property, plant and equipment. Given a useful life of 20 years for the building and no salvage value, show the depreciation transaction that would be recorded at the end of the second year they own the building.