public sector assignment II

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

Assignment for the Course Accounting for Public Sector and Civil Society
Assignment II
Q 1.The following transactions were undertaken by the general fund of Hawassa Town. You
are required to pass the journal entry on the book of General fund only.
1. The town general fund adopted the following budget for the fiscal year of 2009.
Estimated revenue from tax 3,000,000 birr, estimated revenue from inter- governmental
sources 200,000 birr and estimated grant from outside countries 4,500,000 birr.
Appropriation for the next fiscal year was also estimated to be 5,700,000 birr for general
public sector activities which also includes 500,000 birr for purchase of an ambulance for
the towns’ Hospital.
2. The town general fund also estimated to collect a property tax. Therefore, a property tax
of 1,500,000 birr was estimated and levied on property owners. The towns’ general fund
estimated not to collect 10% of the property tax.
3. The towns’ general fund ordered the purchase of an ambulance by the amount of 500,000
birr.
4. Property tax of 1,000,000 birr was collected and the remaining amount became
delinquent. The property owners are charged a penalty of 5,000 birr for not paying in
time.
5. The towns’ general fund collected 2,000,000 birr from general revenue sources.
6. The ambulance ordered is received and the towns’ general fund paid 550,000 birr.
7. A total of 250,000 birr was paid for general purpose expenditure.
8. The remaining property tax and the penalty charged is collected in full amount.
9. The towns’ general fund transferred 50,000 birr to the towns’ debt service fund.
10. The grant from outside countries is collected in full amount.
Q 2.The following are specific transaction in relation to the Hawassa town capital project fund.
Record the necessary entries in relation to capital project fund only.
Hawassa town council approved the construction of Hospital in the town. The total cost of the
construction including equipment purchasing cost is estimated to be 120,000,000 birr. The city
council decided to finance the construction by issuing a serial bond that has a value of
100,000,000 birr, 15%, 25 years and were the payment is made in 25 equal annual installments.
The remaining amount to be financed by the towns’ general fund (5,000,000 birr as a fund
transfer) and the remaining 15,000,000 birr from grant to be received from World Vision
Ethiopia. The construction is expected to be completed in one year and also purchase of
equipment’s needed to operate the hospital were decided to be undertaken side by side with the
construction activity.
1. The bond was issued at a premium of 100,000 birr.
2. The premium on bond is transferred to the towns’ debt service fund.
3. The grant to be received from World Vision and the transfer from General fund was
recorded.
4. Preliminary expenditures for cite clearing, design and preparation in the amount of 50,000
birr is paid.
5. As per the councils’ decision, a digital x-ray machine is ordered by the amount of 500,000
birr.
6. A construction contract was signed by the amount of 90,000,000 birr with Afro-Tsion
construction company.
7. The grant from World Vision and the transfer from General fund is collected in full amount.
8. The digital X-ray machine was actually received at 450,000 birr.
9. The construction company billed the town for completion of half of the construction.
10. The initial claim of the construction company was approved and payment is made by
retaining 10% of the amount to be paid after final inspection.
11. Different equipment’s, machineries and supplies were collectively ordered in the amount of
20,000,000 birr.
12. The first installment of the bond payable is paid.
13. The construction company billed the town for the reaming amount and reported that the
construction is completed.
14. The equipment’s, machineries and supplies ordered were received at a cost of 25,000,000.
15. The final inspection was done and there were no any defects in the construction; therefore,
the retainage percent as well as the second claim is fully paid to the construction company.
16. After all expenditures are paid the remaining amount is transferred to the towns’ debt service
fund and the capital project fund in relation to the construction of Hospital is closed.
Q3. Record the following transactions under purchase and consumption method.
1. During 2005 General fund purchase supply costing Br. 15,000

2. At the end of 2005 Br. 10,000 supplies is unused
3. At the end of 2006 the ending inventory of supply is increased by Br. 5,000
4. At the end of 2006 the ending inventory of supply is decreased by Br. 3,000

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Haramaya University College of Business and Economics

Department of Accounting and Finance

1. During 2005 General fund purchase supply costing Br. 15,000

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