Hawassa University College of Business and Economics Department of Accounting and Finance

1. Record the following transactions (both budgetary and actual entries) in the General Ledger of a
CPF of Santiago County. Reflect all required accruals.
A. The county issues $3,000,000 of 5%, 9-month bond anticipation notes at midyear to allow it to begin
construction of a new library addition. The bond anticipation notes meet the criteria for treatment as
long-term liabilities.
B. The county signs a contract for construction of the library addition for $3,000,000.
C. The contractor billed the county $2,000,000 for work completed by the end of the fiscal year.
D. The bonds, which have a par value of $10,000,000, were issued at 101, net of issue costs of $90,000.
E. The bond anticipation notes and interest were paid at maturity
2. The following transactions took place in the town of Burchette during 20X3:
A. A bond issue of $12,000,000 was authorized for the construction of a library, and the estimated
bond issue proceeds and related appropriations were recorded in the General Ledger accounts of a
new Capital Projects Fund.
B. The bonds were sold at a premium of $90,000.
C. The cost of issuing the bonds, $80,000, was paid.
D. An order was placed for materials estimated to cost $6,500,000.
E. Salaries and wages of $500,000 were paid.
F. The premium, net of bond issuance costs, was transferred to a Debt Service Fund.
3. Butler County issued $2,000,000 of 9-month, 9% bond anticipation notes to provide financing for
construction of a county baseball stadium. This prevented delays in beginning the project, which had been
approved at an estimated cost of $4,000,000. December 31 is the end of the county’s fiscal year. The
following transactionsb occurred during 20X8 and 20X9:
A. The bond anticipation notes were issued at par on July 1, 20X8.
B. The county signed a contract on July 1, 20X8, with the King of Swat Construction Company to build
the stadium. The contract price was $4,000,000.
C. The King of Swat Construction Company billed the county $1,800,000 during 20X8 for work completed
on the project. The county paid the amount billed less a 5% retainage to
be remitted upon final approval of the stadium.
D. On February 20, 20X9, the county issued the baseball stadium bonds ($4,000,000 par) at a price of
$4,180,000, net of $120,000 bond issue costs.
E. The county repaid the bond anticipation notes and interest upon maturity from the bond proceeds.
F. The King of Swat Construction Company billed Butler County $2,200,000 for work performed in 20X9
to complete the baseball stadium. The project was approved by the county, and the King of Swat
Construction Company was paid in full. The remaining assets were transferred to the related Debt
Service Fund.
Required: Prepare the general journal (budgetary and actual) entries to record the preceding
transactions for Butler County. Also, prepare 20X8 and 20X9 financial statements for the county’s
Baseball Stadium CPF. Assume that the bond anticipation notes do not qualify as long-term
liabilities and that the proceeds of the note and of the bond are limited to use for costs directly
related to construction of the baseball stadium
4. Listed below are selected transactions from a Loudon County Debt Service Fund (all amounts are
in thousands of dollars).
[A] The remaining funds of a Capital Projects Fund, $1,500, were transferred to the Debt Service Fund
to be used in the repayment of debt and interest on that debt that was issued to finance and
expansion of the county courthouse.
[B] The county General Fund transferred $8,600 to the Debt Service Fund to provide financing for
principal, interest, and fiscal agent fees for debt service transactions during the year. $6,000 of the
transfer from the General Fund and all of the transfer from the CPF were invested.

Set by: Tekalign Negash Group Assignment Page | 1

[C] The semi-annual payment of interest on bonds issued several years ago by a Capital Projects Fund
came due and was paid. The outstanding principal of these 20-year, 4%, and term bonds is $3,000.
The unamortized discount on these bonds is $100. The bonds were issued 15 years ago on this
date. The payment includes fiscal agent fees of $10.
[D] The county has agreed to set up a small water treatment facility for the remote District 7, now that
the local water supply has been polluted by a hog farm upstream. The cost of the facility, $2,500, is
to be financed over 5 years by special assessments on the homeowners in that district, although the
debt is guaranteed by the county. The assessment principal is paid annually, although the interest
(4%) is paid semi-annually. The first interest payment is due in 6 months, with the first principal
payment due in one year (60 days after year end). The water treatment facility will be operated as a
general government activity.
[E] The annual payment of serial bonds issued 10 years ago by the county came due. The amount
owed is $1,250 in principal, $20 interest, and $5 in fiscal agent fees. The amount due was paid.
[F] The county received interest on its investments, $85. In addition, investments that originally cost
$4,000 were sold for $3,975. (See entry #2)
[G] Another term bond issued 20 years ago by the county came due and was paid. The face amount
and rate was $3,200 and 3%, respectively, and pays interest semi-annually. The fiscal agent fees
were $60.
[H] The semi-annual payment for interest on the outstanding special assessment bonds was paid when
due. Also, $300 of assessments receivable has been collected for the principal payment due next
year.
[I] The regular semi-annual interest payment on the term bonds came due and was paid. (See entry
#3)
[J] A serial bond issued in the current year has its first annual payment of principal and interest due on
the third day of the next fiscal year. As is required by the debt covenant and following the general
procedures for all debt issues of the county, $1,200 ($1,000 for principal, $180 for interest, and $20
for fiscal agent fees) has been transferred from the General Fund to the Debt Service Fund to make
this payment.
Requirements:
1. Record the above transactions in the Debt Service Fund.
2. Indicate the effects of each transaction on the accounting equation of the Debt Service Fund
and on the General Capital Assets and General Long-Term Liabilities accounts. If an element
is not affected, put “NE” in the appropriate box.
5. Prepare general journal entries to record the following transactions in the General Ledger of the General
Fund or a Special Revenue Fund, as appropriate. (b) Explain how these transactions and events are
reported in the General
Fund or Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance.
A. $100,000 of General Fund cash was contributed to establish a new Internal Service Fund.
B. A truck—acquired two years ago with General Fund revenues for $19,000—with a fair value of $10,000
was contributed to a department financed by an Enterprise Fund. (Record the contribution of the asset
to the Enterprise Fund—not the purchase.)
C. The Sanitation Department, accounted for in the General Fund, billed the Municipal Airport, accounted
for in an Enterprise Fund, $800 for garbage collection.
D. General Fund cash of $50,000—to be repaid in 90 days—was provided to enable construction to begin
on a new courthouse before a bond issue was sold.
E. A $9,000,000 bond issue to finance construction of a major addition to the civic centre was sold at par.
The civic centre is accounted for as part of general government activities.
F. General Fund disbursements during May included a contribution of $35,000 to a Capital Projects Fund
to help finance a major capital project.
G. After retirement of the related debt, the balance of the net assets (all cash) of a Debt Service Fund,
$8,500, was transferred to the General Fund.

Set by: Tekalign Negash Group Assignment Page | 2

H. General Fund cash of $70,000 was loaned to an Enterprise Fund from resources that have been
assigned to a specific future purpose. The loan is to be repaid in three years.
I. An accounting error made during the preceding accounting period caused the General Fund cash
balance at the beginning of the current year to be understated by $6,500.
J. Another accounting error was discovered: Expenditures of $4,000, properly chargeable to a Capital
Projects Fund, were inadvertently charged to a Special Revenue Fund during the current year.
Essay Type Questions

Write an essay concerning the Federal Democratic Government of Ethiopia Accounting and Its
Financial Management Practices (Your essay will be completed with the range of 5 to ten pages)

Bonus what can you learn from the following history adopted from holy bible

The Parable of the Three Servants

At that time the Kingdom of heaven will be like this. Once there was a man who was about to leave home on
a trip; he called his servants and put them in charge of his property. He gave to each one according to his
ability: to one he gave five thousand gold coins, to another he gave two thousand, and to another he gave
one thousand. Then he left on his trip. The servant who had received five thousand coins went at once and
invested his money and earned another five thousand. 17 In the same way the servant who had received two
thousand coins earned another two thousand. 18 But the servant who had received one thousand coins went
off, dug a hole in the ground, and hid his master's money.

“After a long time the master of those servants came back and settled accounts with them. The servant who
had received five thousand coins came in and handed over the other five thousand. ‘You gave me five
thousand coins, sir,’ he said. ‘Look! Here are another five thousand that I have earned.’ ‘Well done, you good
and faithful servant!’ said his master. ‘You have been faithful in managing small amounts, so I will put you in
charge of large amounts. Come on in and share my happiness!’ Then the servant who had been given two
thousand coins came in and said, ‘You gave me two thousand coins, sir. Look! Here are another two thousand
that I have earned.’ ‘Well done, you good and faithful servant!’ said his master. ‘You have been faithful in
managing small amounts, so I will put you in charge of large amounts. Come on in and share my
happiness!’ Then the servant who had received one thousand coins came in and said, ‘Sir, I know you are a
hard man; you reap harvests where you did not plant, and you gather crops where you did not scatter seed. I
was afraid, so I went off and hid your money in the ground. Look! Here is what belongs to you.’ You bad and
lazy servant!’ his master said. ‘You knew, did you, that I reap harvests where I did not plant, and gather crops
where I did not scatter seed? 27 Well, then, you should have deposited my money in the bank, and I would
have received it all back with interest when I returned. Now, take the money away from him and give it to the
one who has ten thousand coins. 29 For to every person who has something, even more will be given, and he
will have more than enough; but the person who has nothing, even the little that he has will be taken away
from him. As for this useless servant—throw him outside in the darkness; there he will cry and gnash his
teeth.’

Set by: Tekalign Negash Group Assignment Page | 3