Pass-through Agency Funds- Evergreen County acts as the disbursing agent for a s
ID: 2446074 • Letter: P
Question
Pass-through Agency Funds- Evergreen County acts as the disbursing agent for a state grant for the performing arts. The state is responsible for determining which local governments are eligible for the grant mney and for following up to ensure that the recipients comply with the requirements to the grant. The county receives the grant funds and disburses them according to the schedule provided by the state. When the county was asked to participate, the county's attorney was concered that the county might be held responsible for any disallowed costs. The state agreed to accept responsibility for any disallowed costs. The state agreed to accept responsibilty for any disallowed costs, so the county decided to act as the agent for the state for this grant. The schedule for the grant funds for 2017 is shown below: City of Boulder-$2,100,000 Aspen Township-$1,400,000 Snowton-$900,000 Firtree Village-$600,000 Total-$5,000,000 Required:
a. Prepare the general journal entries necessary to record Evergreen County's receipt of the money on December 31, 2017 (the end of its fiscal year) and disbursement of the grant funds on January 2, 2018.
b. Prepare the general journal entries reuired to record Aspen Township's receipt of the funds; assume that funds are to be used to construct a new performing arts center and all time and eligibility requirements have been met.
c. Since the county received the funds prior to its fiscal year-end, but didn't disburse them until after its fiscal year-end, how would the activities related to the grant be reported in the county's financial statements.
Explanation / Answer
Answer
Prepare the general journal entries necessary to record Evergreen County's receipt of the money on December 31, 2017 (the end of its fiscal year) and disbursement of the grant funds on January 2, 2018.
Answer
Dec31,2017
Dr Cash 5,000,000
CR City of Boulder 2,100,000
CR Aspen Township 1,400,000
CR Snowton 900,000
CR Firtree Village 600,000
January 2, 2018
DR City of Boulder 2,100,000
DR Aspen Township 1,400,000
DR Snowton 900,000
DR Firtree Village 600,000
CR Cash 5,000,000
Prepare the general journal entries reuired to record Aspen Township's receipt of the funds; assume that funds are to be used to construct a new performing arts center and all time and eligibility requirements have been met
Answer:-
DR CASH 1,400,000
CR Evergreen county's 1,400,000
(On receipt of funds from Evergreen)
DR Building (performing arts center ) 1,400,000
CR Cash 1,400,000
c. Since the county received the funds prior to its fiscal year-end, but didn't disburse them until after its fiscal year-end, how would the activities related to the grant be reported in the county's financial statements.
Answer:-
Since it is a libiltiyt whch Evrgreen county has to pay in future. So it should show it in Balance Sheet as Unearned revenue