Over the Course of One Year, Obed County Received Two

question 8

Essay

Over the course of one year, Obed County received two grants:
-$10,000 grant in cash to be used to finance half the cost of expanding the town's water treatment plant. All eligibility requirements have been met.
-$40 grant to educate users on water conservation measures and to monitor water usage by a study group.
Transactions:
1. Received the grant to assist in expanding the water treatment plant.
2. Signed a contract with Swann & Hall Construction to build the water treatment plant expansion, $20,000. The construction project is expected to take less than one year.
3. Received a $5,000 transfer from the General Fund to cover part of the cost of expanding the treatment plant.
4. Received an invoice from S&H Construction for 30% of the project. Paid the contractor the invoiced amount less a 10% retainage.
5. Received the grant to do the water study.
6. Issued $5,000 in bonds at mid-year at par to provide part of the financing for the treatment plant expansion. The bond issue costs were 1% of the face value. The bonds bear interest at 6%, payable semiannually.
7. Received a second invoice for 50% of the project. Paid the contractor the invoiced amount less a 10% retainage.
8. Expenses incurred and paid during the year under this second grant total $30.
9. Received the final invoice from the contractor. The expansion project was finished on-time and in accordance with the contract. Paid the contractor all amounts owed.
10. Make any necessary year-end adjusting entries.
Requirements:
1. Prepare the journal entries required in an Enterprise. If no entry is required, state "No entry required" and explain why.
2. Indicate the effects of each transaction on the accounting equation of the Enterprise Fund accounts. If an element of the equation is not affected or if the net effect is zero, put "NE" in the appropriate box.
3. How would these grants be reported in the statement of revenues, expenses, and changes in net position of the Enterprise Fund?
4. Assuming year-end had occurred after transaction #4, how would the grant and transfer affect the Statement of Net Position for the Enterprise Fund.

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Definitions:

Paracrines

Signaling molecules released by cells that affect other nearby cells.

Hormones

Chemical messengers produced by the endocrine glands that regulate various bodily functions and processes.

Oligodendrocytes

A type of glial cell in the central nervous system that produces and maintains the myelin sheath around neurons.

Interstitial Fluid

The fluid that surrounds the cells in tissues, providing a medium for the exchange of substances between cells and blood.