Transactions: 1. a Loan of $50 Was Made from the General

question 6

Essay

Transactions:
1. A loan of $50 was made from the General Fund to the Gasoline Tax Fund GTF, which is accounted for as a Special Revenue Fund. The loan will be repaid in five years.
2. The General Fund loaned $320 to the Capital Projects Fund-to be repaid in 90 days.
Requirement: Prepare the general journal entries using standard fund-type terminology, identifying the fund or nonfund accounts for which the entry is being prepared. Appropriate abbreviations are acceptable e.g., GF, SRF, CPF, DSF, GCA, GLTL, OFS, or OFU. If no entry is required, write "No Entry Required" and briefly explain why. Do not include formal entry explanations or dates, but include any important assumptions made and all calculations.

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Definitions:

Depreciation

The systematic reduction in the recorded cost of a fixed asset to allocate its cost over its useful life, reflecting wear and tear, decay, or obsolescence.

Net Income

The total profit or loss of a company after all expenses, including taxes and operating costs, have been deducted from revenues.

Indirect Method

The indirect method is a way of reporting cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Capital Structure

The mix of various forms of external funds and equity that a company uses to finance its operations and growth.