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  3. a special districts balance sheet may not capture

A special districts balance sheet may not capture its economic resources and obligations. A special...

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Accounting

A special districts balance sheet may not capture its economic resources and obligations. A special district accounts for its general fund (its only fund) on a modified accrual basis. In a particular

period, it engaged in the following transactions:

  • It issued $20 million in long-term bonds.

  • It acquired several tracts of land at a total cost of $4 million, paying the entire amount in cash.

  • It sold a portion of the land for $1 million, receiving cash for the entire amount. The tract sold had cost $0.8 million.

  • It repaid $2 million of the bonds.

  • It lost a lawsuit and was ordered to pay $9 million over three years. It made its first cash payment of $3 million.

  1. Prepare journal entries to record the transactions in the general fund.

  2. Based on your journal entries, prepare a balance sheet and a statement of revenues, expenditures, and other changes in fund balance.

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