ACC 460 Week 4 Learning Team Chapters 5 - 10 Problems

ACC460

February 13, 2012

                   Instructor

                                           Week Four - Team A Textbook Problems

Chapter 5: Problem 5-11 – Nonexchange expenditures are the mirror image of nonexchange revenues.

A state government provided several grants to school districts and local governments during its fiscal year ending August 31.

a)      Prepare the journal entries that the state would make in fiscal 2013 to record the awards in an appropriate governmental fund. Briefly justify the amount of expenditure that you recognized.

Item 1 - On August 1, 2012, it announced a $2 million grant to a local school district for the purchase of computers. The district can spend the funds upon receipt. On September 15, 2012, the state mailed a check for the full amount to the district. The district spent $1.5 million on computers during fiscal 2013 (i.e., the year ending August 31, 2013) and expects to spend the remaining $0.5 million in fiscal 2014.

1a.       Grant expenditure                                          1,500,000 2,000,000

               Cash                                                                                     1,500,000 2,000,000

            (To record grant expenditure in 2012)

There is grant expenditure for 2013. This is because the district spent 1.5 million on computers the year, retaining .5 million for 2014.

Item 2 – On the same date the state announced a $10 million grant to another school district for the acquisition of equipment. However, per the provisions of this grant the state will make payments only upon receiving documentation from the district that it has incurred allowable costs. In fiscal 2013, the district incurred and documented allowable costs of $8 million. Of this, the state paid only $7 million, expecting to reimburse the district for the balance early in fiscal 2014...