Middlefield County Incurred the Following Transactions During 2014

question 40

Essay

Middlefield County incurred the following transactions during 2014:
1.The county authorized a new general obligation bond issue of $5 million par to construct an office building with a contract price of $4,975,000.The bonds were issued for $4,980,000.
2.The county levied real property taxes of $10,000,000.Eighty-five percent of the net taxes were collected immediately.Two percent of the total levy was estimated to be uncollectible.
3.The office building was completed and the county paid the contract price to the contractor.
4.The General Fund transferred $500,000 to the Debt Service Fund.
5.The county paid $200,000 for interest on the bonds from the Debt Service Fund.
Required:
Prepare journal entries for each of the above transactions.Identify the appropriate fund or funds used by Middlefield County.

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Definitions:

Payables Deferral Period

The average time between the purchase of goods or services by a company and the payment of this outstanding money to its suppliers.

Cash Conversion Cycle

The length of time between the firm’s actual cash expenditures on productive resources (materials and labour) and its own cash receipts from the sale of products (i.e., the length of time between paying for labour and materials and collecting on receivables). Thus, the cash conversion cycle equals the length of time the firm has funds tied up in current assets.

Accounts Payable

Accounts Payable is the amount of money owed by a company to its creditors for goods and services purchased on credit.

Financial Cost

Expenses associated with borrowing funds or purchasing on credit, including interest expenses, fees, and other charges.