Analyze the effects of each of the following transactions on each of the funds a

Question

Analyze the effects of each of the following transactions on each of the funds and/or the nonfund accounts of the City of Nancy. Identify the fund that typically would be used to record the transaction. Indicate how each transaction would be reported in the operating statement for each fund affected. Cash received for licenses during 20X1, $8,000. Revenues of $8,000 are reported in the General Fund statement of revenues, expenditures, and changes in fund balance. Salaries and wages for firefighters and police officers incurred but not paid, $75,000. The city borrowed $9,000,000 to finance construction of a new city executive office building by issuing bonds at par. The city paid $5,000,000 to the office building contractor for work performed during the fiscal year. The city purchased several notebook computers by issuing a $60,000. 6%, 6-month note to the vendor. The note is due March 1 of the next fiscal year, which is the calendar year. (The note is considered a fund liability.) General Fund resources of $8,000,000 were paid to a newly established Airport Enterprise Fund to provide initial start-up capital. A $3,000,000 personal injury lawsuit has been filed against the city. The controller determines that it is probable that a judgment in that amount will be made in the future but does not expect to have to pay the judgment for another 3 years. The incident relates to general government activities. The city repaid one-half ($10,000,000) of general obligation bonds that had been issued several years before to finance construction of a school building. Interest of $1,000,000 matured and was paid. The city sold general capital assets with an original cost of $50,000 and a $1,000 book value for $1,500. There are no restrictions on the use of the money.

Explanation / Answer

1. Salaries and wages for firefighters and police officers are incurred but not paid.It means expenses are due but not paid.As accounts are records on accrual basis.So its expenditure is increased.

2. When we borrow money from someone our cash/funds are increased.So when city borrowed $ 9,000,000 to finance construction of new executive office building by issuing bonds then funds are increased.

3.When we paid cash our funds or cash decreases.so in point 3 funds decreased.

4. When notebook computers are purchased by issuing a $ 60,000, 6% , 6- month note to vendor.Here the note is due but not paid so there is no effect in fund.

5. Whene general fund resources are paid then funds are decreased.

6. When events are depending on happening or non happening then it is contingent liability.So in present case there is probability of happening or non happening.So no effect on funds.

7.When we paid cash our funds or cash decreases.so in point 7 funds decreased.

8. When we sold anything there is inflow of cash.So in point 8, funds are increased.

So when there is effect on funds , it means we can use that fund from that transaction.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.