Option #1: Transactions for Fund Statements and Government-wide Statements
Preston Village engaged in the following transactions:
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- It issued $20 million in bonds to purchase a new municipal office building. The proceeds were recorded in a capital projects fund.
- It acquired the building for $20 million.
- It recognized, as appropriate, $300,000 of depreciation on municipal vehicles.
- It transferred $2,060,000 from the general fund to a debt service fund.
- It paid $60,000 in interest on long-term debt and repaid $2 million of principal on the same long-term debt.
- It sold for $5 million village land that had been acquired for $4 million. The proceeds were recorded in the general fund.
Answer the following question based on the transactions outlined:
- For each of the transactions, prepare journal entries to record them in appropriate governmental funds (which are accounted for on a modified accrual basis).
- Prepare journal entries to reflect how the transactions would be reflected in government-wide statements (which are prepared on a full accrual basis).
- How can governments justify preparing two sets of financial statements, each on a different basis?
In your analysis, include the following:
- An introduction
- Requirements 1 – 3 (don’t forget to show your work)
- Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table.
- For written answers, please make sure your responses are well written.
- Follow the CSU-Global Guide to Writing and APA.
- The required number of pages for the assignment does not include the title page and the reference page.
- Reach out to your instructor if you have any questions about the assignment.