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CHAPTER 4: ACCOUNTING FOR GOVERNMENTAL OPERATING ACTIVITIES ILLUSTRATIVE TRANSACTIONS AND FINANCIAL STATEMENTS IN CLASS EXERCISE 4-4. $6,720,000 = gross levy - (.04 * gross levy) $6,720,000 = (1 - .04) * gross levy $6,720,000 = .96 * gross levy gross levy = $6,720,000/.96 = $7,000,000 . Solutions to Exercises and Problems 4-1. The answers will differ from student to student, since each has a different annual report. The instructor may wish to have copies made of good examples of statements, charts, graphs, informative schedules, and tables. Some class discussion of the different presentations found by students is worthwhile. As a suggestion, you may ask students to carefully review the government-wide statement of net assets and statement of activities and comment on the usefulness of those two statements. 4-2. 1. a . 6. a . 2. c . 3 . d. 8. c. 9. b. 5. d. 10. b . 4-4. a . REMOVED 4-6. a. (1) May 1, 2011 Debits Credits DUE FROM STATE GOVERNMENT 200,000 DEFERRED REVENUES 200,000 (Note: There are no eligibility requirements stipulated in the grant. Thus, the grant can be recorded upon notification. There are, however, time restrictions that half of the grant is to be used in each of the 2012 and 2013 fiscal years. Therefore, revenues cannot be recognized until the period for which 4-1
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use of the grant is intended.) (2) July 1, 2011 CASH 100,000 DUE FROM STATE GOVERNMENT 100,000
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