ACCT 321 Accounting Questions Solutions

ACCT 321 Accounting Question Solutions

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

• Assignments submitted through email will not be accepted.

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• Submissions without this cover page will NOT be accepted.

ACCT 321 Accounting Question Solutions

Assignment Question(s):(Marks 5)

Q1. Distinguish between Capital Projects Funds (CPF), Debt Service Funds (DSF) Leased Assets and Permanent Funds

Q2. The Tawain Township Debt Service Fund accumulates resources to pay its $4 million general obligation debt. The debt is payable in equal annual installments of principal over 10 years with 5% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund.

ACCT 321 Accounting Question Solutions

a.The Township levies a special property tax amounting to $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 $250,000 in a six-month certificate of deposit.

d.Debt service (interest of $2,000,000 and principal of $4,000,000) becomes due and payable.

e.The debt service liabilities are paid.

Q3. The City Taif uses an Internal Service Fund (ISF) to provide centralized printing services for all City agencies. City agencies are billed on a per-page basis (number of pages in a document times the number of documents printed). The City requires the ISF to develop its billing rate so as to recover all costs on the accrual basis of accounting, plus the cost of repaying a start-up loan made by the City to the ISF. Compute the rate per page to be charged by the ISF, based on the following factors:

a.Start-up loan from City to ISF – $500,000 non-interest bearing loan, to be repaid in equal payments over 10 years

b.Printing equipment – estimated to cost $600,000 and to have an average life of 10 years

c.Personnel costs – Estimated salaries of $750,000, plus contribution to Pension Trust Fund of 10% of salaries

d.Paper- Opening inventory of $26,000; expected purchases of $92,000; expected ending inventory of $22,000

e.Occupancy costs – Estimated at $150,000 per year

f.Expected number of pages to be printed – 10 million

Q4. Heat Village maintains a Pension Trust Fund for its employees. At the start of the year, the Fund holds cash of $150,000 and investments that have a fair value of $4,000,000. The Fund has the following transactions. Prepare entries to record them in the Fund’s accounts

a.Bills the General Fund $200,000 for the required annual contribution. The pension plan does not require contributions from the employees

b.Receives payment of $200,000 from the General Fund

c.Receives interest and dividend income of $150,000 in cash on its investment portfolio

d.Receives $215,000 from selling investments carried on the books at $200,000

e.Makes new investments totaling $275,000

ACCT 321 Accounting Question Solutions

Q5. Prepare entries to record the following transactions, showing which funds are affected. If a transaction affects more than one fund, prepare entries for all affected funds.

a. The county adopts the following budget for its General Fund on January 1, 2019.

Estimated revenues:

Property taxes$520,000

Sales taxes 80,000

Appropriations:

Salaries 480,000

Supplies and other60,000

Transfer to Debt Service Fund50,000

b. The county sends property tax invoices to all property owners. To raise the needed $520,000, the county sends tax bills for $525,000, anticipating that some will not pay.

c. Property owners pay taxes amounting to $500,000. The county writes off $5,000

in taxes as uncollectible. The remaining taxpayers declared delinquent, and the county adds interest and penalties of $1,000 to their tax bills. The county believes that all delinquent taxpayers will pay their bills between April 1 and June 30, 2020.