Journalizing in a General Fund:
Modified Accrual Basis:
Issued $20 million in long-term bonds.
Acquired several tracts of land at a total cost of $4million, paying the entire amount in cash.
To journalize transactions in a General Fund using the modified accrual basis, you would need to follow these steps:
1. Identify the type of transaction: In this case, we have two transactions: issuance of long-term bonds and acquisition of land.
2. Determine the accounts affected: For the issuance of long-term bonds, you would typically have an account called "Bonds Payable" and another one for the cash received, such as "Cash." For the land acquisition, you would have an account called "Land" and another one for the cash paid, such as "Cash."
3. Determine the amounts involved: For the issuance of long-term bonds, the amount is given as $20 million. For the land acquisition, the total cost is given as $4 million, which means we will debit the Land account for $4 million.
4. Apply the rules of the modified accrual basis: The modified accrual basis focuses on recognizing revenues when they become available and measurable and recognizing expenditures when they become due and measurable. This means that in the General Fund, we will typically record revenues when they are received in cash and expenditures when they are paid in cash.
Now, let's journalize these transactions:
1. Issuance of $20 million long-term bonds:
Debit: Bonds Payable (increase in long-term debt)
Credit: Cash (increase in cash from bond issuance)
2. Acquisition of land for $4 million in cash:
Debit: Land (increase in land assets)
Credit: Cash (decrease in cash due to land acquisition)
Remember, these journal entries are just a simplified example and may not reflect the specific chart of accounts used by a particular organization. Additionally, when preparing financial statements, additional adjustments may be required based on specific reporting requirements and any other financial activities that have occurred during the accounting period.