ACC 405
Module 6 Project
Practice Problems and Solutions
Southern New Hampshire University
, lOMoARcPSD|51648332
ACC-405
Module Six Practice Problems and Solutions
Problem 1. The following events take place:
1. Hector Madras died and left 100 acres of undeveloped land to the city for a future park. He acquired the land at $100 an acre, but at the date of
his death, the land was appraised at $8,000 an acre.
2. The city authorized the transfer of $100,000 of general revenues and the issuance of $1,000,000 in general obligation bonds to construct
improvements on the donated land. The bonds were sold at par.
3. The improvements were completed at a cost of $1,100,000, and the operation of the park was turned over to the City Parks Department.
Required:
Prepare entries in general journal form to record these transactions in the proper fund(s). Designate the fund in which each transaction is recorded. If
the transaction did not result in a journal entry to a government fund, record the journal entry needed to reflect the information in the government ‐
wide Statement of Net Position.
Answer
1. Government-Wide Statement of Net Position
Land ($8,000 x 100) 800,000
Revenue from Donations 800,000
2. General Fund
Transfer to Capital Projects Fund 100,000
Cash 100,000
Capital Projects Fund
Cash 1,000,000
Bond Issue Proceeds 1,000,000
Cash 100,000
Transfer From General Fund 100,000
Government-Wide Statement of Net Position
Cash 1,000,000
Bonds Payable 1,000,000
3. Capital Projects Fund
Expenditures 1,100,000
Cash 1,100,000
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, lOMoARcPSD|51648332
Bond Issue Proceeds 1,000,000
Transfers From General Fund 100,000
Expenditures 1,100,000
Government-Wide Statement of Net Position
Cash 1,000,000
Bond payable 1,000,000
Problem 2. On January 1, 2020, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and
principal of $80,000 matures each January 1 starting in 2021. The debt will be serviced through a special tax levy designed especially for this purpose.
Therefore, transfers will be provided as needed from the Special Revenue Fund.
The following transactions occurred relating to the Debt Service Fund.
2020
June 29 A transfer of $36,000 was received from the Special Revenue Fund.
July 1 The semiannual interest payment was made.
Dec. 18 A Special Revenue Fund transfer of $20,000 was received.
2021
Jan. 1 A payment on bond principal and semiannual interest was made.
2031
Jan. 2 Accumulations in the Debt Service Fund amounted to $55,000 in investments and $40,000 in cash. The investments were liquidated at face
value and the final interest and principal payment was made.
Jan. 4 Having served its purpose, the Debt Service Fund's remaining assets were transferred to the Special Revenue Fund.
Required:
Prepare the journal entries necessary to record the foregoing transactions.
Answer
2020
June 29 Cash 36,000
Transfer from Special Revenue Fund 36,000
To record transfer received
Downloaded by Benjamin Luca ()
Module 6 Project
Practice Problems and Solutions
Southern New Hampshire University
, lOMoARcPSD|51648332
ACC-405
Module Six Practice Problems and Solutions
Problem 1. The following events take place:
1. Hector Madras died and left 100 acres of undeveloped land to the city for a future park. He acquired the land at $100 an acre, but at the date of
his death, the land was appraised at $8,000 an acre.
2. The city authorized the transfer of $100,000 of general revenues and the issuance of $1,000,000 in general obligation bonds to construct
improvements on the donated land. The bonds were sold at par.
3. The improvements were completed at a cost of $1,100,000, and the operation of the park was turned over to the City Parks Department.
Required:
Prepare entries in general journal form to record these transactions in the proper fund(s). Designate the fund in which each transaction is recorded. If
the transaction did not result in a journal entry to a government fund, record the journal entry needed to reflect the information in the government ‐
wide Statement of Net Position.
Answer
1. Government-Wide Statement of Net Position
Land ($8,000 x 100) 800,000
Revenue from Donations 800,000
2. General Fund
Transfer to Capital Projects Fund 100,000
Cash 100,000
Capital Projects Fund
Cash 1,000,000
Bond Issue Proceeds 1,000,000
Cash 100,000
Transfer From General Fund 100,000
Government-Wide Statement of Net Position
Cash 1,000,000
Bonds Payable 1,000,000
3. Capital Projects Fund
Expenditures 1,100,000
Cash 1,100,000
Downloaded by Benjamin Luca ()
, lOMoARcPSD|51648332
Bond Issue Proceeds 1,000,000
Transfers From General Fund 100,000
Expenditures 1,100,000
Government-Wide Statement of Net Position
Cash 1,000,000
Bond payable 1,000,000
Problem 2. On January 1, 2020, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and
principal of $80,000 matures each January 1 starting in 2021. The debt will be serviced through a special tax levy designed especially for this purpose.
Therefore, transfers will be provided as needed from the Special Revenue Fund.
The following transactions occurred relating to the Debt Service Fund.
2020
June 29 A transfer of $36,000 was received from the Special Revenue Fund.
July 1 The semiannual interest payment was made.
Dec. 18 A Special Revenue Fund transfer of $20,000 was received.
2021
Jan. 1 A payment on bond principal and semiannual interest was made.
2031
Jan. 2 Accumulations in the Debt Service Fund amounted to $55,000 in investments and $40,000 in cash. The investments were liquidated at face
value and the final interest and principal payment was made.
Jan. 4 Having served its purpose, the Debt Service Fund's remaining assets were transferred to the Special Revenue Fund.
Required:
Prepare the journal entries necessary to record the foregoing transactions.
Answer
2020
June 29 Cash 36,000
Transfer from Special Revenue Fund 36,000
To record transfer received
Downloaded by Benjamin Luca ()
