Parsley City Joined with Two Other Cities to Create a Regional

question 77

Essay

Parsley City joined with two other cities to create a regional landfill authority. The initial cash investment by each community was as follows: The landfill will be governed by a seven-member board-two members chosen by each mayor and one member chosen by majority vote of the six mayoral appointees. During the first year of operation the landfill, which receives no tax dollars, generated an excess of revenues over expenses of $120,000.
REQUIRED:
Record the journal entries Parsley City should make under each of the mutually exclusive situations listed below, assuming that all participants have an equal equity interest in the authority. Indicate in which fund the entry is being made.
a) Assume that Parsley City appropriates the $15 million contribution from its general fund resources.
b) Assume that Parsley City uses the resources available in its city utility enterprise fund to make the contribution.

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Definitions:

Maintenance

The process of preserving or keeping equipment, machinery, buildings, etc., in working order by conducting regular check-ups and repairs.

Income Effect

How an alteration in income for either a person or an economic system influences the demand levels for a certain good or service.

Price Ceiling

A legally imposed maximum price on goods or services, beyond which they cannot be sold.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price.