Olivia Village was recently incorporated and began financial operations on July 1, 20X2, the beginning of its fiscal year. The following transactions occurred during this first fiscal year, July 1, 20X2, to June 30, 20X3:

1. The village council adopted a budget for general operations for the fiscal year ending June 30, 20X3. Revenue was estimated at $400,000. Legal authorizations for budgeted expenditures totaled $394,000.

2. Property taxes were levied in the amount of $390,000; 2 percent of this amount was estimated to prove uncollectible. These taxes are available as of the date of levy to finance current expenditures.

3. During the year, a village resident donated marketable securities valued at $50,000 to the village under the terms of a trust agreement. Those terms stipulated that the principal amount be kept intact. The use of revenue generated by the securities is restricted to financing college scholarships for needy students. Revenue earned and received on these marketable securities amounted to $5,500 through June 30, 20X3.

4. A general fund transfer of $5,000 was made to establish an internal service fund to provide for a permanent investment in inventory.

5. The village decided to install lighting in the village park through a special assessment project authorized to do so at a cost of $75,000. The city is obligated if the property owners default on their special assessments. Special assessment bonds were issued in the amount of $72,000, and the first year’s special assessment of $24,000 was levied against the village’s property owners. The remaining $3,000 for the project will be contributed from the village’s general fund.

6. The special assessments for the lighting project are due over a three-year period, and the first year’s assessments of $24,000 were collected. The $3,000 transfer from the village’s general fund was received by the lighting capital projects fund.

7. A contract for $75,000 was let for the installation of the lighting. The capital projects fund was encumbered for the contract. On June 30, 20X3, the contract was completed and the contractor was paid.

8. During the year, the internal service fund purchased various supplies at a cost of $1,900.

9. Cash collections recorded by the general fund during the year were as follows:

 
Current property taxes

$386,000

Licenses and permit fees

7,000

The allowance for estimated uncollectible taxes is adjusted to $4,000.

10. The village council decided to build a village hall at an estimated cost of $500,000 to replace space occupied in rented facilities. The village does not record project authorizations. It was decided that general obligation bonds bearing interest at 6 percent would be issued. On June 30, 20X3, the bonds were issued at face value of $500,000, payable in 20 years. No contracts have been signed for this project, and no expenditures have been made, nor has an annual operating budget been prepared.

11. A fire truck was purchased for $15,000 and the voucher was approved and paid by the general fund. This expenditure was previously encumbered for $15,000.

Required

Prepare journal entries to record properly each of these transactions in the appropriate fund or funds of Olivia Village for the fiscal year ended June 30, 20X3.

Use the following funds: general fund, capital projects fund, internal service fund, and private-purpose trust fund. Each journal entry should be numbered to correspond to the transactions. Do not prepare closing entries for any fund. Your answer sheet should be organized using the follow­ing format:

 
Fund

Journal Entry

Answer rating: 100% (QA)

Required solution Date Particulars Debit Credit 2 Property Tax receivable AcDr 390000 To Revenue Ac ... View the full answer