Each of the Following Transactions Relates to the Activities of a County

Essay

Each of the following transactions relates to the activities of a county for the current year.
1) General obligation bonds with a par value of $10 million are issued at par to finance the construction of administrative facilities. The facilities are constructed for a total cost of $9.9 million, and the remaining cash of $100,000 is transferred to the debt service fund for future payment of bond principal and interest.
2) Equipment is sold by the general fund for $500,000. If the equipment had been reported using full accrual accounting, its book value at the time of sale would have been $450,000.
3) The county water and sewer unit issues $10 million in bonds at par, to finance its operations. The bonds will be paid from water and sewer revenues collected from county residents, and the water and sewer unit is reported in an enterprise fund.
4) Depreciation on water and sewer plant and equipment is $800,000.
5) A special revenue fund purchases equipment for $1 million.
6) Principal payments of $200,000 and interest payments of $300,000 are made on general obligation bonds used to finance general operations. Interest and principal payments are reported in a debt service fund.
Required
a. For each of the above transactions, prepare the journal entries necessary to record the transactions in (1) the fund financial statements, and (2) the government-wide financial statements for the county. For the government-wide entries, indicate whether the item is reported in governmental or business-type activities. For the fund entries, indicate which fund is affected.
b. For each transaction item, indicate whether it is added, subtracted, or is not included in the reconciliation of the change in fund balances of governmental funds to the change in net position of governmental activities, appearing on the government-wide statements, and the amount of the reconciliation item, if included.