TRANSACTIONS FOR FUND STATEMENTS AND GOVERNMENT-WIDE STATEMENTS

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Option #1: Transactions for Fund Statements and Government-wide Statements

Preston Village engaged in the following transactions:

  • It issued $20 million in bonds to purchase a new municipal office building. The proceeds were recorded in a capital projects fund.
  • It acquired the building for $20 million.
  • It recognized, as appropriate, $300,000 of depreciation on municipal vehicles.
  • It transferred $2,060,000 from the general fund to a debt service fund.
  • It paid $60,000 in interest on long-term debt and repaid $2 million of principal on the same long-term debt.
  • It sold for $5 million village land that had been acquired for $4 million. The proceeds were recorded in the general fund.

Instructions:

Answer the following question based on the transactions outlined:

  1. For each of the transactions, prepare journal entries to record them in appropriate governmental funds (which are accounted for on a modified accrual basis).
  2. Prepare journal entries to reflect how the transactions would be reflected in government-wide statements (which are prepared on a full accrual basis).
  3. How can governments justify preparing two sets of financial statements, each on a different basis?

In your analysis, include the following:

  1. An introduction
  2. Requirements 1 – 3 (don’t forget to show your work)
  3. Conclusion

Paper Requirements:

  • Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table.
  • For written answers, please make sure your responses are well written.
  • Follow the CSU-Global Guide to Writing and APA.
  • The required number of pages for the assignment does not include the title page and the reference page.
  • Reach out to your instructor if you have any questions about the assignment.

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