The Geneva Housing Authority, a governmental entity, accounts for its activities on a modified accrual basis of
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Question:
The Geneva Housing Authority, a governmental entity, accounts for its activities on a modified accrual basis of accounting. In the current period, it reports the following transactions:
- The Authority issues $2.5 million in long-term bonds.
- The Authority purchases 4 acres of land for $500,000 in cash.
- It sells one of these acres of land for $125,000 in cash.
- It made a $325,000 payment on the debt, consisting of $75,000 of interest and $250,000 in principal.
- It lost a lawsuit filed by one of its renters and was ordered to pay $1 million in damages over 5 years. It made its first cash payment of $200,000.
Requirements:
- Prepare journal entries to record each of these transactions in the general fund.
- Based on your entries, prepare a balance sheet and statement of revenues, expenditures, and changes in fund balance for the general fund.
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