Question

(Effect of different measurement focuses and bases of accounting)

Following are some of Friendly Village’s transactions during the calendar year 2019. For each transaction, state (a) the amount the Village would report as expenditures for the year 2019 if the transaction occurred in a governmental‑type fund and (b) the amount it would report as expenses for the year if the transaction occurred in an Enterprise Fund.

1. Friendly paid $600,000 in salaries during the year. In addition, during the last pay period, Friendly’s employees earned $5,000 by December 31, but that amount was not paid until the first week of January, 2020.

2. Friendly used the proceeds of long‑term bonds to buy a sanitation truck. The truck was delivered on July 1, 2019, and immediately placed into service. The truck cost $100,000 and had an estimated useful life of 10 years.

3. Friendly had agreed to pay off the $100,000 used to buy the sanitation truck (see previous transaction) over a 5‑year period, starting December 31, 2019. On that date, Friendly paid the first installment on the debt, $10,000 in principal and $3,000 in interest.

Answer 1

page-01 Answer Required 0 General fund - $ 605,000 Enterprise fuind .$605,000 under both methods modified aceruel and accrual basis of accounting, actual of the r stub periodh is Salary are made. Requined ☺ General fund - ¢100,000 Enterprise fund & 5,000 Entére Capital outlays are reported as expenditures in the General fund, whereas only depreciation of 6 months is reported as expenses in the enterprise feend. Required - General fund - $13,000 Enterprise fund - $ 3000 Entire dept Service payments are reported as expenditures on the General fund, whereas principal xe payment as reduction of liability and interest payment as expenses wie reported by Enterprise fund