Assignment Question(s):(Marks 15)
(5 Marks)
Prepare entries to record the following transactions related to acquisition of capital assets by a county. The county does not use encumbrance accounting.
a.The county issues general obligation bonds in the amount of SAR 900,000, receiving cash for the full face amount of the bonds. The cash will be used to buy capital assets.
b.The county buys a prefabricated building for SAR 750,000, using part of the bond proceeds. The building is delivered and the invoice for the building is approved.
c.The invoice approved in b. is paid.
d.The General Fund transfers cash of SAR 55,000 to another fund in anticipation of the payment of the first installment of interest (SAR 30,000) and principal (SAR 25,000) on the debt.
e.The first installment of debt service on bonds issued in (a) becomes due and payable.
f.Debt service on the bonds issued in a. is paid.
Q2. Following information are related with Internal Service Fund of City of Jeddah. You are
required to prepare a Statement of Cash Flows for the year ended December 31, 2018.
(5 Marks)Amount ($)
| Operating income | 68,400 |
| Increase in Inventories | 27,200 |
| Interest received | 800 |
| Acquisition of Capital Assets | 2,800 |
| Payment to Suppliers | 32,000 |
| Depreciation expense | 29,600 |
| Payments for Rent | 21,200 |
| Increase in Accounts Payable | 54,400 |
| Receipts from Customers | 378,400 |
| Payment to Employees | 200,000 |
| Cash balance at the beginning of the year | 584,800 |
Q3. The following transactions are related with a Township Debt Service Fund. Prepare journal
entries to record the transactions in the Debt Service Fund.
(5 Marks)
a. The Township levies a special property tax amounting to $1,750,000 to pay debt
service on its long-term general obligation debt. The tax must be accounted for in
the Debt Service Fund.
b. All the property taxes levied for debt service purposes are collected.
c. The Township invests $525,000 in a six-month certificate of deposit.
d. Debt service (interest of $350,000 and principal of $700,000) becomes due and
payable.
e. The debt service liabilities are paid.
f The certificate of deposit in c. matures and the Township receives a total of $535,500,
which includes $10,500 of interest.
