(Capital Asset Purchases and Leases) 1. Record the following 20X9 transactions i
ID: 2435782 • Letter: #
Question
(Capital Asset Purchases and Leases)1. Record the following 20X9 transactions in the Harris County General Fund General Ledger. Assume:
a. The county entered into a capital lease for police safety equipment. The capitalizable cost of the equipment was $2,500,000, and the county made a $500,000 down payment at the inception of the lease. The effective interest rate implicit in the lease was 5%, compounded semiannually.
b. The county paid its first semiannual lease payment of $180,000.
To record semiannual lease payment interest is an Espenditure of $50,000.
c. The second semiannual lease payment of $180,000, due the last day of the county's fiscal year, was paid.
Expenditures--Interest show how your amount is calculated.
d. The county purchased patrol cars costing $128,000. The county paid $40,000 down and signed a 5% note requiring semiannual payment of $30,000e. The county paid the first semiannual payment on the note, $30,000.
Expenditure--Interest (88,000 x .05 x .5)----2,200
f. The second semiannual note payment of $30,000, due the last day of the county's fiscal year, was paid.
Credit cash for $30,812
2. What amount of capital outlay expenditures should be be reported for the county General Fund for 20X9?
20X9 Capital=$2,500,000 + 128,000=$2,628,000
explain why this mount is correct
3. What amount of debt service expenditures should be reported for the General Fund for 20X9?
20X9 Debt Service= ($180,000 x 2) + ($30,812 x 2) = $421,624 explain why this amount is correct.
4. If the second semiannual payment on the lease and on the note are due 2 months after year end, what amount of capital outlay expenditures should the county report for 20X9? What amount of debt service expenditures should be reported for 20X9?
20X9 Capital Outlay= $2,500,000 + $128,000 = $2,628,000
20X9 Debt Service = $180,000 + $30,812 = $210,812
explain why these amount are correct
Explanation / Answer
1 a Expenditures - Capital Outlay 2500000 OFS - Capital Lease 2000000 Cash 500000 b Expenditure - Debt Service - Principal 130000 Expenditure - Debt Service - Interest 50000 Cash 180000 (TO record the first semi annual payment ) c Expenditure - Debt Service - Principal 133250 Expenditure - Debt Service - Interest 46750 Cash 180000 (To record the second semi annual payment ) Interst = (2,000,000 - 130,000) * 0.05 *0.5 d Expenditures - Capital Outlay 128,000 OFS - Notes Payable 88000 Cash 40000 f Expenditure - Debt Service - Principal 28612 Expenditure - Debt Service - Interest 2200 Cash 30812 (To record the first semi annua payment ) 2 General Fund Expenditures : Capital Lease - 2,500,000 Patrol Cars-180,000 Total - 2,680,000 3 This amount is correct because 2 semi annual notes for Capital lease - 180,000 * 2 = 360,000 2 semi annual notes for Notes Payable - 30,812 * 2 = 61,624 Total - 421,624 4 These amounts are correct because if the second semi annual payments are due after 2 months , only 1 semi annual payments woulsd be due this year
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