[stozzo88]

Hey all,

I was wondering if someone could shed some light on this for me.
Becker Question – Why is the Interest payments (on debt) through October 1 of $30,000; and Principal payments of $10,000 incurred through December 31 but paid on January 2; excluded? I’m confused since we include the principle of $40k and interest of 7,500.

Question:

Bunson Township was incorporated on January 1, Year 1, and is preparing its government-wide financial statements for the year ended December 31, Year 1. The governmental funds displayed a combined change in fund balance of $500,000 for that year and also had the following balances, data, or transactions:

Capital outlay of $250,000 partially funded by long-term debt proceeds of $225,000;

Current year depreciation of $60,000 on a capital asset base of $1,200,000;

Principal payments (on debt) of $40,000;

Interest payments (on debt) through October 1 of $30,000;

Principal payments of $10,000 incurred through December 31 but paid on January 2;

Interest payments of $7,500 incurred through December 31 but paid on January 2;

Sales tax revenues of $30,000 associated with December 31, Year 1 sales remitted to the State in February and paid to the Township in March.

The government-wide changes in net position would be displayed as:
a. $527,500

 

 

FAR - 82 1/18/2016
BEC - 81 2/22/2016
REG - 84 4/11/2016
AUD - 86 5/17/2016

PA Licensed CPA 2016

FAR- 1-18-2016- 82
BEC- 2-22-2016- 81
REG- 4-11-2016- 84
AUD- 5-17-2016- 86

[Oh]

Principal of 40k has been added on because gov funds expensed(or expenditured) it (I/S) whereas for gov wide we need to put the amount as payable (B/S), hence the reconciliation.

Same for the interest $7500, we need to put that as payable for gov wide.

As for the intest 30k, both gov wide and fund have expensed it, so there’s no need to reconcile.

As for the 10k incurred, same as interest, gov wide have the principal on current payable (assuming) and there’s no need for us to expense it now on december.

Please tell me i’m right.

And pray for me that I pass. Thanks.

[Author]

Replies