Problem 15-2 (LO 1, 2, 3) Measurement focus and basis of accounting. Select the best answer for each of the following multiple-choice questions. (Nos. 1, 5, and 7–10 are AICPA adapted.)1. The encumbrances control account of a governmental unit is increased when a voucher payable isa. notrecordedandthebudgetaryaccountsarenotclosed. b. notrecordedbutthebudgetaryaccountsareclosed. c. recordedandthebudgetaryaccountsareclosed. d. recordedbutthebudgetaryaccountsarenotclosed.2. If not expenditure driven, a grant approved and paid by the federal government to assist in a city’s welfare program during the current year should be credited toa. Revenues. b. FundBalance—ReservedforWelfarePrograms. c. FundBalance—Unassigned. d. OtherFinancingSources.3. Which one of the following equations will yield the available balance in an expenditure subsidiary ledger account?a. Appropriations????ExpendituresTotal b. Appropriations????EncumbrancesBalance c. Appropriations????ExpendituresTotal????EncumbrancesBalance d. Appropriations????ExpendituresTotalþEncumbrancesBalance4. Lacking sufficient cash for operations, a city borrows money from a bank, using as collat- eral the expected receipts from levied property taxes. Upon receipt of cash from the bank, the general fund would creditCopyright 2016 Cengage Learning. All Rights Reserved. May not be c Revenues. b. Other Financing Sources. c. TaxAnticipationNotesPayable. d. TaxesReceivable—Delinquent.5. Elm City issued a purchase order for supplies with an estimated cost of $5,000. When the supplies were received, the accompanying invoice indicated an actual price of $4,950. What amount should Elm debit (credit) to the reserve for encumbrances after the supplies and invoice were received?a. ($50) b. $50 c. $4,950 d. $5,0006. The recorded amount for uncollectible taxes was overstated. To revise the estimate during the same fiscal period, the journal entry would credita. Expenditures. b. Revenues. c. AllowanceforUncollectibleDelinquentTaxes. d. FundBalance—Unassigned.7. Mile-High City’s year-end is June 30. Mile-High levies property taxes in January of each year for the calendar year. One-half of the levy is due in May, and one-half is due in October. Prop- erty tax revenue is budgeted for the period in which payment is due. The following informa- tion pertains to Mile-High’s property taxes for the period from July 1, 2018, to June 30, 2019:Levy ...................... Collected in:May.................... July..................... October................. December ...............2018$2,000,000950,000 50,000 920,000 80,0002019$2,200,0001,000,000 30,000The $70,000 balance due for the May 2019 installments was expected to be collected in August 2019. What amount should Mile-High recognize for property tax revenue for the year ended June 30, 2019?a. $2,100,000 b. $2,200,000 c. $2,360,000 d. $2,400,0008. BoaCityhadthefollowingfixedassets:Fixedassetsusedinproprietaryfundactivities ................................. Fixedassetsusedingeneralgovernmentactivities ..............................$1,000,000 9,000,000What aggregate amount should Boa account for in the general fixed assets account group?a. $9,000,000 b. $10,000,000 c. $10,800,000 d. $11,800,000 ThefollowinginformationpertainstoCherryCity’sliabilityforclaimsandjudgments:CurrentliabilityatJanuary1,2018 ............................................ Claimspaidduring2018 .................................................... CurrentliabilityatDecember31,2018 ......................................... NoncurrentliabilityatDecember31,2018 ......................................What amount should Cherry report for 2018 claims and judgment expenditures?a. $1,140,000 b. $940,000 c. $840,000 d. $900,000$200,000 900,000 240,000 200,00010. Dodd Village received a gift of a new fire engine from a local civic group. The fair value of this fire engine was $400,000. Which of the following is the correct entry to be made in the general fixed assets account group for this gift?a. b.c. d.Memorandum entry only GeneralFundAssets ....................................Private Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . InvestmentinGeneralFixedAssets ......................... GiftRevenue ........................................ MachineryandEquipment ............................... Investment in General Fixed Assets from Private Gifts . . . . . . . . .Debit400,000 400,000 400,000Credit400,000 400,000 400,000Problem 15-3 (LO 4, 7) Journal entries, identify funds. Land City leases a fleet of gar- bage trucks. The term of the lease is 10 years, approximately the useful life of the equipment. Based on a sales price of $800,000 and an interest rate of 6%, the city agrees to make annual payments of $108,694. Upon the expiration of the lease, the trucks will revert to the city.1. Prepare appropriate journal entries in the general fund, the general fixed assets account group, and the general long-term debt account group to record the signing of the lease.2. Prepare appropriate journal entries in the same fund and account groups to record the first payment on the lease. The city records depreciation on garbage trucks using the straight-line method