ACCT 4421: Module 5 - Study Guide with Practice Questions & Answers

ACCT 4421: Module 5 - Study Guide with Practice Questions & Answers Bilberry County voted to establish an internal service fund to account for printing and copying for all its departments and agencies. The county engaged in the following activities related to the new fund. The county commission voted to transfer $300,000 from the general fund to the internal service fund to establish the new fund. Dr. ? for $300,000 Cr. ? for $300,000 Options: Due to General Fund Cash Revenue Nonreicprocal Transfer-In from General Fund - Answers - Dr. Cash Cr. Nonreciprocal Transfer-In from General Fund Falmouth City owns and operates a mini-bus system which it accounts for in an enterprise fund. Choose the journal entry to be used to record the following transactions, which occurred in a recent year. The mini-bus system issued $5 million of 8 percent revenue bonds at par and used the proceeds to acquire new mini-buses. Dr. ? for $5M Cr. ? for $5M - Answers - Dr. Mini-buses Cr. Revenue Bonds Payable Falmouth City owns and operates a mini-bus system which it accounts for in an enterprise fund. Choose the journal entry to be used to record the following transactions, which occurred in a recent year. The system accrued 6 months interest on the revenue bonds at year-end. Dr. ? for $200,000 Cr. ? for $200,000 - Answers - Dr. Interest Expense Cr. Accrued Interest When insurance premiums went through the roof, Jolly City decided to "self-insure." It established an internal service fund (ISF), setting aside resources for potential claims in the new fund. During the year, the following transactions were recorded in the ISF: The ISF recognized $1.5 million in claims expense/liabilities in accordance with GASB standards and paid $1.3 million of those claims. Based on an actuarial calculation, the ISF billed the other funds of the city for $2.0 million. Of this amount, $1.2 million was billed to the city's general fund and $0.8 million was billed to the city's water and sewer enterprise fund. The actuarial valuation included a reasonable provision for future catastrophe losses of $0.3 million. Choose the journal entries to record these transactions in the city's self-insurance ISF. A. Dr. Cash $2M & Expense - Claims $1.3M Cr. Revenue $2M & Cash $1.3M B. Dr. Cash $2M, Expense - Cl - Answers - B. Dr. Cash $2M, Expense - Claims $1.5M & Claims Liability $.02M Cr. Revenue $2M & Cash $2M State University maintains accounts for each of its student groups. The monies collected by the Accounting Fraternity are deposited with the university. As the fraternity authorizes disbursements of its funds, the university disburses the monies. During the year, the fraternity engaged in the following transactions. Choose the appropriate entry for each transaction to be recorded on the books of the university. The fraternity operated a book exchange on a consignment basis and collected The fraternity operated a book exchange on a consignment basis and collected revenues of $10,000. It authorized the university to write $9,000 of checks to the students whose books the fraternity had sold. The fraternity was pleased with the $1,000 profit. Entry to record payments for consigned books: A. Dr. Due to Fraternity $9,000 Cr. Cash $9,000 B. Dr. Expense $9,000 Cr. Cash $9,000 C. No options are correct D. Dr. Expenditure $ - Answers - A. Dr. Due to Fraternity $9,000 Cr. Cash $9,000 Bilberry County voted to establish an internal service fund to account for printing and copying for all its departments and agencies. The county engaged in the following activities related to the new fund.The County issued $2 million in general obligation bonds at 101. The bonds were issued to acquire additional equipment and are to be serviced from the internal service fund.Choose the correct journal entry to record these events in the internal service fund. A. Dr. Cash $2,020,000 Cr. Bonds Payable $2,020,000 B. Dr. Cash $2,020,000 Cr. Deferred Bond Premium $20,000 & Bonds Payable $2,000,000 C. Dr. Cash $1,980,000 & Bond Premium $20,000 Cr. Bonds Payable $2,000,000 D. Dr. Cash $2,000,000 Cr. Bonds Payable $2,000,000 - Answers - B. Dr. Cash $2,020,000 Cr. Deferred Bond Premium $20,000 & Bonds Payable $2,000,000 State University maintains accounts for each of its student groups. The monies collected by the Accounting Fraternity are deposited with the university. As the fraternity authorizes disbursements of its funds, the university disburses the monies. During the year, the fraternity engaged in the following transactions. Choose the appropriate entry for each transaction to be recorded on the books of the university. The fraternity operated a book exchange on a consignment basis and collected The fraternity operated a book exchange on a consignment basis and collected revenues of $10,000. It authorized the university to write $9,000 of checks to the students whose books the fraternity had sold. The fraternity was pleased with the $1,000 profit. The entry to record book sales: A. Dr. Cash $10,000 Cr. Due to Fraternity $10,000 B. No options are correct C. Dr. Cash $10,000 Cr. Nonreciprocal Transfer-In $10,000 D. Dr. Cash - Answers - A. Dr. Cash $10,000 Cr. Due to Fraternity $10,000 State University maintains accounts for each of its student groups. The monies collected by the Accounting Fraternity are deposited with the university. As the fraternity authorizes disbursements of its funds, the university disburses the monies. During the year, the fraternity engaged in the following transactions. Choose the appropriate entry for each transaction to be recorded on the books of the university. The fraternity deposited $400 in student dues. A. Dr. Cash $400 Cr. Nonreciprocal Transfer-In $400 B. Dr. Cash $400 Cr. Due to Fraternity $400 C. Dr. Cash $400 Cr. Revenue $400 D. No options are correct - Answers - B. Dr. Cash $400 Cr. Due to Fraternity $400 Carlton City has operated a City Utility (Enterprise) Fund for a number of years. The fund accounts for the activities of the city-owned electric, water and sewer systems. During the current year, the city engaged in the following transactions related to the city utility Fund. Choose the appropriate journal entries. The city billed its customers $1 million for services provided during the year. Dr. ? $1M Cr. ? $1M - Answers - Dr. Accounts Receivable Cr. Revenue Carlton City has operated a City Utility (Enterprise) Fund for a number of years. The fund accounts for the activities of the city-owned electric, water and sewer systems. During the current year, the city engaged in the following transactions related to the city utility Fund. Choose the appropriate journal entries. The city received $260,000 from a developer to connect new houses to the existing utility lines. Dr. ? $260,000 Cr. ? $260,000 - Answers - Dr. Cash Cr. Capital Contributions (Revenues) Carlton City has operated a City Utility (Enterprise) Fund for a number of years. The fund accounts for the activities of the city-owned electric, water and sewer systems. During the current year, the city engaged in the following transactions related to the city utility Fund. Choose the appropriate journal entries. Depreciation on existing physical plant was $700,000 Dr. ? $700,000 Cr. ? $700,000 - Answers - Dr. Depreciation Expense Cr. Accumulated Depreciation Wilmer County provides a defined benefit pension plan for its employees. The county accounts for the pension plan in a pension trust fund, which is included in the county's basic financial statements. In Year 1, the pension trust fund sent billings to the general fund and the City Utility (enterprise) Fund for the actuarially determined amount of required contributions. The general fund was billed $300,000 but paid only $220,000 during the year. The enterprise fund was billed $450,000 and paid $530,000. Choose the correct journal entries