Government-wide statements report on assets and liabilities that are denied reco

Question

Government-wide statements report on assets and liabilities that are denied recognition on funds statements. Entrepreneurs Consultants, a state agency, was estab- lished to provide consulting services to small businesses. It maintains only a single general fund and accounts for its activities on a modified accrual basis. During its first month of operations, the association engaged in, or was affected by, the following transactions and events:
1. It received an unassigned grant of $100,000.
2. It purchased five computers at $2,000 each.
3. It paid wages and salaries of $6,000.
4. Itborrowed$24,000fromabanktoenableittopurchase an automobile. It gave the bank a long-term note.

5. It purchased the automobile for $24,000.
6. It made its first payment on the note—interest of $200.
7. It destroyed one of its computers in an accident. The computer was not insured.
a. Prepare journal entries in the general fund to record each of the transactions or other events.
b. Prepare a balance sheet and a statement of revenues and expenditures for the general fund.
c. Prepareagovernment-widestatementofnetposition (balance sheet) and statement of activities. These should be on a full accrual basis. Assume that the capital assets have a useful life of five years and that no depreciation is to be charged on the computer that was destroyed.

Explanation / Answer

Part a)

The journal entries are given below:

___________

Part B)

The balance sheet and statement of revenues and expenditures for the general fund are given below:

___________

___________

Part C)

The statements of net position and net activities are given below:

___________

Account Titles Debit Credit 1 Cash $100,000 Grant Revenue $100,000 2 Computer Expenditure (5*2,000) $10,000 Cash $10,000 3 Wages Expenditure $6,000 Cash $6,000 4 Cash $24,000 Proceeds from Borrowing $24,000 5 Automobile Expenditure $24,000 Cash $24,000 6 Interest Expenditure $200 Cash $200 7 No Journal Entry Needed

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