37. Pocahontas School District an independent public school district financed the acquisition of a new school bus by signing a note for $90 000 plus interest on the unpaid balance at 6%. Annual principal payments of $30 000 plus interest are due each July 1. Assuming that the District maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements the appropriate entry at the date of acquisition is a) Debit Expenditures $90 000; Credit Notes Payable $90 000. b) Debit Fixed Assets $90 000; Credit Notes Payable $90 000. c) Debit Expenditures $90 000; Credit Other Financing Sources $90 000. d) Debit Fixed Assets $90 000; Credit Other Financing Sources $90 000. 38. Star City leased a bulldozer for use in activities accounted for in the General Fund. The City paid $30 000 and agreed to pay $30 000 per year for 3 years. The bulldozer has a useful life of six years. The lease qualified as a capital lease. Assuming that the city maintains is books and records in a manner that facilitates the preparation of the fund financial statements the appropriate entry in the General Fund at the date of acquisition would be a) Debit Expenditures $120 000; Credit Cash $30 000 and Other Financing Sources $90 000. b) Debit Expenditures $30 000 and Prepaid Lease $90 000; Credit Cash $30 000 and Other Financing Sources $90 000. c) Debit Equipment $120 000; Credit Cash $30 000 and Other Financing Sources $90 000. d) Debit Expenditures $120 000; Credit Cash $30 000 and Lease Payable $90 000. 39. Star City leased a bulldozer for use in activities accounted for in the General Fund. The City paid $30 000 and agreed to pay $30 000 per year for 3 years. The bulldozer has a useful life of six years. The lease qualified as a capital lease. Assuming that the city maintains is books and records in a manner that facilitates the preparation of the government-wide financial statements the appropriate entry at the date of acquisition would be a) Debit Expenditures $120 000; Credit Cash $30 000 and Other Financing Sources $90 000. b) Debit Expenditures $40 000 and Prepaid Lease $80 000; Credit Cash $30 000 and Other Financing Sources $90 000. c) Debit Equipment $120 000; Credit Cash $30 000 and Lease Payable $90 000. d) Debit Expenditures $120 000; Credit Cash $30 000 and Lease Payable $90 000. 40. The City of Hiawatha issued $10 million of term bonds as of April 1 2004. The bonds bear interest at 6% due and payable each October 1 and April 1. Assuming the City maintains its books and records in a manner that facilitates the preparation of its fund financial statements the appropriate entity to record interest on the debt at June 30 2007 (the City’s fiscal year-end) is a) Debit Expenditures $300 000; Credit Interest Payable $300 000. b) Debit Expenditures $300 000; Credit Other Financing Uses $300 000. c) Debit Expenditures $300 000; Credit Due to Bondholders $300 000. d) No entry required. 41. Banker County has outstanding $5 million of term bonds that bear interest at 6% payable semiannually each January 30 and July 30. The County’s fiscal year-end is 12/31. On December 28 2006 the County transferred $300 000 to the Debt Service Fund. At December 31 the maximum amount the Debt Service Fund may recognize as interest expenditure is a) $150 000 b) $300 000. c) $125 000. d) $0. 42. Several years ago Durham City issued $1 million in zero coupon bonds due and payable in 2010. The bonds were sold at an amount to yield investors 6% over the life of the bonds. During the current year how much interest expenditures would Durham City recognize related to these bonds? a) Difference between the present value of the bonds at the beginning of the period and th present value of the bonds at the end of the period. b) Face amounts of bonds times 6%. c) Book value of bonds times 6%. d) None. 43. The City of Holbrook transferred $100 000 from the General Fund to the Debt Service Fund for payment of interest. The appropriate entry in the General Fund to record this transfer would be a) Debit Expenditures $100 000; Credit Cash $100 000. b) Debit Other Financing Uses—Transfer Out $100 000; Credit Cash $100 000. c) Debit Fund Balance—Transfer Out $100 000; Credit Cash $100 000. d) Debit Other Financing Sources—Transfer In $100 000; Credit Cash $100 000. 44. The City of Holbrook transferred $100 000 from the General Fund to the Debt Service Fund for payment of interest. The appropriate entry in the Debt Service Fund to record this transfer would be a) Debit Cash $100 000; Credit Revenue $100 000. b) Debit Cash $100 000; Credit Other Financing Uses—Transfer Out $100 000. c) Debit Cash $100 000; Credit Fund Balance—Transfer In $100 000. d) Debit Cash $100 000; Credit Other Financing Sources—Transfer In $100 000. 45. Harris County transferred $200 000 from the General Fund to the Motor Pool Internal Service Fund to pay for the use of automobiles during the first six months of FY 2007. The appropriate entry in the General Fund to record this transfer of cash would be a) Debit Expenditures $200 000; Credit Cash $200 000. b) Debit Other Financing Uses—Transfer Out $200 000; Credit Cash $200 000. c) Debit Fund Balance—Transfer Out $200 000; Credit Cash $200 000. d) Debit Other Financing Sources—Transfer In $200 000; Credit Cash $200 000. 46. Which of the following items is NOT an example of an item that would be reported as Other Financing Sources/Uses in the General Fund? a) $10 million received from the issuance of bonds. b) $7 000 received from the sale of a used bulldozer. c) $200 000 capital lease obligation for a new bulldozer. d) $100 000 paid to a Motor Pool Internal Service Fund for automobile usage during the period. 47. Other financing sources/uses would appear on which of the following statements? a) Balance sheet. b) Statement of Revenues Expenditures and Changes in Fund Balance. c) Cash flow statement. d) None of the above. 48. State employees earn $10 million in vacation leave. $7 million is paid in the current year and the remaining amount is deferred to future years. Which of the following the accounts will be credited in the general fund entry and the government-wide entry? General Fund Government-wide a) Cash Cash & Accrued Vacation Pay b) Cash & Accrued Vacation Pay Cash c) Cash Cash d) Cash No Entry e) No Entry Cash 49. The construction of a Bike Path in Bay City was accounted for in a capital projects fund. Financing for the project came from the following sources: Transfer from Bay City’s general fund $10 000 Proceeds from general obligation bond issue $100 000 Grant from state government $50 000 Which of the following amounts should appear in this year’s governmental funds statement of revenues expenditures and changes in fund balances for Other Financing Sources? a) $160 000 b) $110 000 c) $100 000 d) $10 000 e) $60 000
