P2-4 (Transaction Analysis) (1) Analyze the effects of each of the following tra
ID: 2422888 • Letter: P
Question
P2-4 (Transaction Analysis) (1) Analyze the effects of each of the following transactions on each of the funds and nonfund accounts of the City of Timbuktu. (2) Indicate how each transac tion would be reported in the operating statement for each fund affected 1. Salaries and wages paid to general government employees from unrestricted resources during the year totaled $3,000,000. Salaries and wages payable at the beginning of the year totaled $50,000 and at year-end amounted to $32,000 The city issued $10,000,000 of 10-year, 8% bonds at the beginning of the year. Interest is due semiannually at the beginning of each year and at mid-year. The bonds were issued at par to provide for the construction of a new police and fire facility Indicate any accruals required at the end of the year that the bonds were issued Construction costs totaling $5,000,000 were paid during the year related to the police and fire facility. A bill from the contractor requiring an additional payment of S346,500 was received before year end but was not paid by year end. In the beginning of year 2, the city paid the bond interest due and retired $1,000,000 of bonds. Before the payments were made, an adequate amount of General Fund resources was paid to the fund from which the bond payments were made to provide for those pay ments. (Analyze both transactions.) 2. 3. 4. 5.Explanation / Answer
The Madoff investment scandal broke in December 2008 when former NASDAQ chairman Bernard Madoff admitted that the wealth management arm of his business was an elaborate Ponzi scheme.
He founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest.[1][2][3] Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pled guilty to 11 federal crimes and admitted to operating what has been the largest Ponzi scheme in history.[4][5] On June 29, 2009, he was sentenced to 150 years in prison with restitution of $170 billion. According to the original federal charges, Madoff said that his firm had "liabilities of approximately US$50 billion".[6][7] Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008.[4][8][9] Ignoring opportunity costs and taxes paid on fictitious profits, half of Madoff's direct investors lost no money.[10]
Investigators have determined others were involved in the scheme.[11] The U.S. Securities and Exchange Commission (SEC) has also come under fire for not investigating Madoff more thoroughly; questions about his firm had been raised as early as 1999. Madoff's business, in the process of liquidation, was one of the top market makers on Wall Street and in 2008, the sixth-largest.[12]
Madoff's personal and business asset freeze has created a chain reaction throughout the world's business and philanthropic community, forcing many organizations to at least temporarily close, including the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT
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