GNP Exam 2: Journal Entries

What is the entry to record the kickoff of a transfer of ownership government lease in the FUND

DR: lease expend

CR: OFS CR: Cash (annuity due BOY)

What is the entry to record the kickoff of a transfer of ownership government lease in the NON-FUND

DR: Leased equipment

CR: LT Lease Payable CR: Net Position

What is the entry to record EOY of a transfer of ownership government lease in the FUND

No entry

What is the entry to record EOY of a transfer of ownership government lease in the NON-FUND

DR: Depreciation Expense

CR: Acc Dep

What is the entry to record the kickoff of a no transfer governmental lease in the FUND?

DR: Lease expend

CR: OFS CR: Cash

What is the entry to record the kickoff of a no transfer of ownership governmental lease in the NON-FUND^?

DR: RUTA

CR: LT lease payable CR: Net Position

What is the entry to record the EOY of a no transfer governmental lease in the FUND?

No entry

What is the entry to record the EOY of a no transfer of ownership governmental lease in the NON-FUND?

DR: Amortization Expense

CR: Acc Amtz

Property taxes are collected in advance for year 20X7 in the year 20X6…

DR: Cash

CR: Deferred Rev

Property taxes become legally usable in 20X6 but will not be collected until 20X7. If they are to be collected on Feb 1 of 20X7, the on 12/31/20X6…

DR: Taxes receivable

CR: Rev

What is the entry to record derived tax revenue when cash is received?

DR: Cash

CR: Tax rev

What is the entry to record derived tax revenue when the underlying transaction takes place, but cash will be received by EOY 60 days?

DR: Tax Receivable

CR: Tax rev

What is the entry to record imposed tax revenue when cash is received?

DR: Cash

CR: Tax / Fine Rev

What is the entry to record imposed tax revenue when cash to be collected by EOY 60 days?

DR: Tax / Fine Rec

CR: Tax / Fine Rev

What is the entry when grant money is received before eligibility requirements are met?

DR: Cash

CR: Unearned Rev

What is the entry to record the money is spent for allowable costs (either before it is actually received and if the eligibility requirements haven’t been met yet)?

DR: Expenditures

CR: Cash

What is the entry to record the grant when the eligibility requirements are met, and money has been spent for allowable costs? and cash has already been received

DR: Unearned Rev

CR: Revenue

What is the entry to record the grant money has been spent on allowable costs and the requirements are met but it has not been received yet and its 60 days out?

DR: Grant Rec

CR: Unearned Rev

What is the entry to record when you receive the grant money that has been spent on allowable costs and the requirements have been met?

DR: Cash

CR: Grant Rec

What is the entry to record the purchase of supplies / materials on credit under the consumption method or purchases method (periodic)?

DR: Expend

CR: V/P

What is the entry to record when supplies are issued into use during the year under the consumption method or purchases method (periodic)?

None

What is the entry to record 50k of remaining supplies at EOY under the purchases method?

DR: Inventory 50k

CR: OFS - Inventory 50k

What is the entry to record 50k of remaining supplies at EOY under the consumption method?

DR: Inventory 50k

CR: Expenditures 50k

What is the entry to record the purchase of supplies under the consumption method perpetual system?

DR: Inventory of supplies

CR: V/P

During the year assume that 600k of supplies / materials are issued…

DR: Expenditures 600k

CR: Inventory 600k

When would you need an entry at EOY under the consumption method perpetual system?

Only if there was a shortage or overage

Assume that during the year 600k is paid for vacation and sick leave. Assume it was not previously accrued.

DR: Expenditure 600k

CR: Cash 600k

No non-fund

AT EOY, there is 500k in vacation pay outstanding expected to be used next year. Assume that at least 100k of total vacation will be taken in early next year and paid with EAFR. (Fund entry)

DR: Expenditure 100k

CR: Vacation payable 100k

AT EOY, there is 500k in vacation pay outstanding expected to be used next year. Assume that at least 100k of total vacation will be taken in early next year and paid with EAFR. (Non-fund entry)

DR: Net Position

CR: LTL

What are the rules for when to accrue vacation pay?

1. the work must be done already

2. compensation through PTO or by Cash at termination or retirement

3. Only accrue if termination or retirement happens in the first 30 days of new year or if they say they are using EAFR

What are the rules for when to accrue sick pay?

1. the work must be done already

2. compensation through PTO or by Cash at termination or retirement

3. Only accrue if termination or retirement happens in the first 30 days of new year or if they say they are using EAFR

4. NEVER accrue sick pay for expected sick days

200k of sick leave is earned by EOY, all of it is expected to be taken during the winter season next year, however only 25% accrues as a buyout option at retirement or termination. Only 25k will be paid with EAFR.

DR: Expenditure 25k

CR: Accrued Sick payable 25k

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Plan to issue 2 million of refunding bonds at 101, with issue costs (BIC) of 15k. Assume the old bonds are retired at par. What is the entry in the FUND for the issuance of the new debt?

DR: Cash 2.005 million DR: Expenditures -BIC 15k

CR: OFS-Bonds (face) 2 million CR: OFS-premium 20k

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Plan to issue 2 million of refunding bonds at 101, with issue costs (BIC) of 15k. Assume the old bonds are retired at par. What is the entry in the NON-FUND for the issuance of the new debt?

DR: Net Position 2.02 million

CR: Refunding B/P 2 million CR: premium on bp 20k

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Plan to issue 2 million of refunding bonds at 101, with issue costs (BIC) of 15k. Assume the old bonds are retired at par. What is the entry in the FUND for the retirement of the old debt?

DR: OFU - retirement of refunded term bonds 2 mil

CR: Cash 2 million

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Plan to issue 2 million of refunding bonds at 101, with issue costs (BIC) of 15k. Assume the old bonds are retired at par. What is the entry in the NON-FUND for the retirement of the old debt?

DR: Term b/p 2 mil

CR: np 2 mil

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. New advance refunding bonds (2 million) were issued at a discount of 85k and 15k of BIC. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). What is the entry to record the refunding bond in the FUND?

DR: Cash 1.9 mil DR: BIC Expend 15k DR: OFU- discount 85k

CR: OFS - refunding bonds 2 mil

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. New advance refunding bonds (2 million) were issued at a discount of 85k and 15k of BIC. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). What is the entry to record the refunding bond in the NON-FUND?

DR: Net Position DR: Discount on BP

CR: Refunding Bond Payable

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. New advance refunding bonds (2 million) were issued at a discount of 85k and 15k of BIC. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). What is the entry to record the retirement of OLD BONDS to trust in the FUND?

DR: OFU 1.9 million

CR: Cash 1.9 million

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. New advance refunding bonds (2 million) were issued at a discount of 85k and 15k of BIC. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). What is the entry to record the retirement of OLD BONDS to trust in the NON-FUND?

DR: Bond payable 2 mil

CR: NP 2 mil

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). The SGL has 600k of net assets in an existing DSF for the old debt. The remaining 1.3 million will be financed by (a) a 300k transfer from the GF to the DSF and (b) a 1 million advance refunding bond issue that is sold to a net 1 million after deduction of 10k issue costs. (The bond is sold at a 10k premium). What is the entry to record the refunding bond in the FUND?

DR: Cash 1.3 mil DR: Expend BIC 10k

CR: OFS - transfer in 300k CR: OFS - bonds 1 mil CR: 1OFS- premium 10k

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). The SGL has 600k of net assets in an existing DSF for the old debt. The remaining 1.3 million will be financed by (a) a 300k transfer from the GF to the DSF and (b) a 1 million advance refunding bond issue that is sold to a net 1 million after deduction of 10k issue costs. (The bond is sold at a 10k premium). What is the entry to record the refunding bond in the NON-FUND?

DR: NP

CR: Refund bp CR: premium pb

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). The SGL has 600k of net assets in an existing DSF for the old debt. The remaining 1.3 million will be financed by (a) a 300k transfer from the GF to the DSF and (b) a 1 million advance refunding bond issue that is sold to a net 1 million after deduction of 10k issue costs. (The bond is sold at a 10k premium). What is the entry to record the retirement of old bond to trust in the FUND?

DR: OFU - payment to refund DR: Expenditure to refund

CR: Cash

2 million term bond issue is OLD DEBT SLG has already paid 55k interest due upon maturity. Old term bonds mature several years hence, and the amount needed to service them (1.9 million) is placed in an escrow trust (in substance defeasance). The SGL has 600k of net assets in an existing DSF for the old debt. The remaining 1.3 million will be financed by (a) a 300k transfer from the GF to the DSF and (b) a 1 million advance refunding bond issue that is sold to a net 1 million after deduction of 10k issue costs. (The bond is sold at a 10k premium). What is the entry to record the retirement of old bond to trust in the NON-FUND?

DR: BP 2 mil

CR: Np 2 mil

Infrastructure must be….

capitalized

The modified approach to infrastructure is not required to depreciate if what two things are true?

1. an asset management program is in place

2. Documentation that the assets are being preserved at or above given condition level

If modified approach is used routine, expenditures made for IA are EXPENDED but additions / improvements to the IA that increase capacity / efficiency (rather than just extended useful life) should be _______.

capitalized

The RULE for works of art and historical treasures

Capitalize at their historical cost or FMV at the date of donation

The EXCEPTION for works of art and historical treasures?

Not required to capitalize if a collection is inexhaustible

What is the entry for a work of art / historical treasure if the collection is capitalized? (non-fund)

DR: Asset

CR: Donation Rev

What is the entry for a work of art / historical treasure if the collection is not capitalized? (non-fund)

DR: program expense

CR: Donation revenue

Suppose that a memorial statute with a cost of 5k and acc dep of 2500 is sold for 850. What is the entry in the general fund?

DR: Cash 850

CR: OFS 850

Suppose that a memorial statute with a cost of 5k and acc dep of 2500 is sold for 850. What is the entry in the non-fund?

DR: NP 2500 DR: Acc dep 2500

CR: memorial statue 5k

Is the gain / loss from the sale of GCAs shown in the fund or non-fund?

No, it is only shown in the gov wide statements

Suppose that instead that the memorial statue with a cost of 5k and acc dep of 2500 is retired and sold for salvage value of 500. Costs to ship the statue to the buyer were paid by the seller and amounted to 150. What is the entry in the general fund?

DR: Expenditure shipping 150

CR: Cash 150

DR: Cash 500

CR: Expenditure shipping 150 CR: OFS - salvage 350

Suppose that instead that the memorial statue with a cost of 5k and acc dep of 2500 is retired and sold for salvage value of 500. Costs to ship the statue to the buyer were paid by the seller and amounted to 150. What is the entry in the non-fund?

DR: Acc dep 2500 DR: NP 2500

CR: statue 5k

In intragovernmental transfer of GCA what is the rule for proprietary to GF?

Transfer at lower of book vs FMV

Suppose a GCA with a BV of 7k and a FMV of 10k is transferred to the GF from the proprietary, what is the entry that the proprietary fund makes? (also assume 4500 of acc dep and cost of 11,500)

DR: capital contributions 7k DR: Acc dep 4500

CR: equipment 11,500

Suppose a GCA with a BV of 7k and a FMV of 10k is transferred to the GF from the proprietary, what is the entry that the GCA NONFUND? (also assume 4500 of acc dep and cost of 11,500)

DR: equipment 11,500

CR: acc dep 4500 CR: NP 7k

Suppose a GCA with a BV of 7k and a FMV of 10k is transferred from GF to the PROP, what is the entry that the proprietary fund makes? (also assume 4500 of acc dep and cost of 11,500)

DR: Equipment 7k

CR: Capital contribution 7k

At what value are gf to pf transfers of GCAs recorded at in the pf?

at net

What are bond anticipation notes and why are they issued?

Issued when bond issued proceeds make take a while and cash is needed now and when interest rates are expected to decline and bond issues are purposefully delayed taking advantage of lower rates.

What are BANs repaid with?

The bond issue proceeds

Short term BANs are treated as…

LTD

Suppose that A Governmental Unit issued $500,000 of BANs in 20X1 prior to issuing the bonds. The notes were issued at the face amount to the XYZ Bank; no issue costs were incurred. The entry to record the BAN issue proceeds in the Capital Projects Fund would be:

DR: Cash 500k

CR: OFS - BANs (face) 500k