Question

Both exercises

EXERCISE 18-1 Identify the Fund The following transactions take place: 1. A cement mixer was purchased with resources of the general fund. 2. A contract was signed for the construction of a new civic center. 3. Bonds were issued to finance the construction of the new civic center. 4. Construction of the civic center was completed. Required: Indicate the name of the fund(s) in which each of the transactions or events should be recorded. EXERCISE 18-2 Identify the Fund The following transactions take place: 1. A commitment was made to transfer general revenues to the entity in charge of providing transportation for all government agencies. 2. Construction bonds were issued at a premium. The premium is to be included in funds accumulated to retire the debt. 3. Police salaries were paid. 4. Interest and principal were paid on general obligation serial bonds. Required: Indicate the name of the fund(s) in which each of the transactions or events should be recorded.

Answer 1

Exercise 18-1:

1. Mixer is an Fixed Assets.

Journal; Cement Mixer Ac Dr

To General Fund/Reserve

2.Signing of contract is just create a legal compliance. It does not create any obligation to record in Books of Accounts.It is just an event not Transaction.

3. It is a transaction as it involve monetary changes to the entity.Therefore the journal is

Bank   A/C .....DR

To Bond Liability A/C

4. Revenue Should be recorded as obligation to construct a Civic centre is completed.

Accounts Receivables(Assets) A/C ..........DR

To Construction Revenue(Income)

Exercise 18-2:

1. Transportation Expenses A/C .......Dr

To Bank/Cash/Accounts Payable

2. Journal Entry for the transaction

Cash A/C............... Dr

To Bond Payable A/C

To Premium on Bond A/C

3. Journal Entry:

Police Salary/ Salary A/C...........Dr

To Cash/Bank A/C

4. We can Pass journal entry in one entry itself but it will create confusion within you so let pass it one by one:

i) Interest on Band Expenses A/c ..........DR

To Cash/Bank A/C

ii) Bond Payable   A/C........Dr

To Bank/Cash A/C