Exam 5: Recognizing Expenditures in Governmental Funds

State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service. There are no requirements for research, study, or service during the compensated sabbatical leave. A particular faculty member earns $40,000 per year. Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?

During the year the City of Hamburg engaged in the following transactions. The city uses the consumption method of recording inventories and prepayments. The city has a 6/30 fiscal year end. REQUIRED: Record the following transactions related to supplies, prepaid items and fixed asset acquisitions. a. During the year the city purchased $600,000 of expendable supplies. b. On September 1 the city paid $360,000 for a three-year insurance policy to cover some assets used in general government activities. c. On December 1 the city purchased four pickup trucks for general government activities. The trucks cost $100,000 in total. d. On January 1 the city leased some office equipment for use in the administrative offices. The lease qualified as a capital lease. The present value of the minimum lease payments is $96,000. e. On April 1 the city leased a copying machine. The lease qualified as an operating lease. The terms of the lease require yearly payments of $2,000 each April 1 for 5 years. The city prepaid the entire five years of the lease.

The City of Hiawatha issued $10 million of term bonds as of April 1, 2017. The bonds bear interest at 6 percent, due and payable each October 1 and April 1. Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements the appropriate entity to record interest on the debt at June 30, 2018 (the city's fiscal year-end) is

As used in government accounting, expenditures are decreases in

Several years ago, Grant County was sued by a former county employee for wrongful discharge. Although it was to be contested by the county, at the time of the lawsuit the attorneys believed that the county was likely to lose the suit and the estimated amount of the ultimate judgment would be $100,000. This year, the case was finally settled with a judgment against the county of $150,000, which was paid. Assuming that the county maintains its books and records in a manner to facilitate the preparation of its fund financial statements, the entry in the current year should be

Which of the following activities would be classified as a reciprocal interfund activity?

Banker County has outstanding $4 million of term bonds that bear interest at 6 percent payable semiannually each January 30 and July 30. The county's fiscal year-end is 12/31. On December 28, 2018, the County transferred $240,000 to a debt service fund. At December 31, the maximum amount the debt service fund may recognize as interest expenditure is

If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account.

In budgeting for governmental funds, governments appropriate the resources for general capital assets in the periods when they are to be purchased, not in the periods in which the assets will be used.

Use the following information to answer Questions Sick leave vests at the completion of the fifth year of employment, and unused sick leave is paid in cash upon termination or retirement. During the fiscal year ended 6/30/18, city employees who are paid from the general fund earned $2.8 million of sick leave, of which $1.0 was taken. Of the balance, the city estimates that $0.2 million will be taken in the next 60 days, $0.6 million will be taken in the next five years, $0.4 million will vest, and $0.6 million will never be taken. -The amount of sick leave expense that should appear on the government-wide financial statements for the fiscal year ended 6/30/18 is

The following information relates to the Central School District. In January 2018, the district acquires $500,000 of equipment by way of a capital lease. The lease, which incorporates an annual interest rate of 6 percent, requires the district to make four annual payments of $144,295 each. The equipment has a useful life of four years with no expected salvage value. In 2018, the district makes the first of the required payments. 1. Prepare all journal entries that the district should make in an appropriate governmental fund to record the acquisition of the equipment and the first lease payment. 2. How much expense relating to the equipment should the district recognize in its 2018 government-wide financial statements? Specify the account or accounts to be charged and the amount to be charged to each account.

Which of the following funds would use the modified accrual basis of accounting in preparing its fund financial statements?

In a governmental fund, expenditures for wages and salaries should be recognized in the period in which the employees receive their paychecks.

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6 percent. Annual principal payments of $35,000, plus interest, are due each July 1. Assuming that the district maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the general fund at the date of acquisition is

The amount of pension expenditures that a government should recognize in its general fund financial statements during the current year is

Other financing sources/uses would appear on which of the following statements?

The City of Roswell has a 6/30 fiscal year-end. The city uses the consumption method for recognizing inventories and prepayments. On July 1, 2017, the city leased computer equipment for use in the city's general activities. The lease is a three-year lease that qualifies as an operating lease. The city prepaid the entire three-year rental fee of $45,000. At June 30, 2018, the appropriate account balances in the general fund associated with this transaction would be

State University, a very large public university, has a policy of granting faculty members a one-year sabbatical leave after a period of seven years of continuous employment. The leave is to be used for further study, research, or service. During the fiscal year ended 6/30/18, the university paid $3 million to faculty members on sabbatical leave and estimated that faculty members currently not on sabbatical leave earned $3.5 million toward sabbatical leaves they are likely to take in the future. The amount of sabbatical expenditures for the year ended 6/30/18 should be

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6 percent. Annual principal payments of $35,000, plus interest, are due each July 1. Assuming that the district maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition is

Several years ago, Grant County was sued by a former county employee for wrongful discharge. Although it was to be contested by the county, at the time of the lawsuit the attorneys believed that the county was likely to lose and the estimated amount of the ultimate judgment would be $100,000. This year, the case was finally settled with a judgment against the county of $150,000, which was paid. Assuming that the county maintains its books and records in a manner to facilitate the preparation of its government-wide financial statements, the entry in the current year should be