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E2-10 (Transaction AnalysisProprietary vs. Governmental Model)

1. Analyze the following transactions, assuming that a business-type activity was involved. For any borrowing transactions, reflect any necessary year-end interest accruals in your responses.

2. Analyze the following transactions, assuming that a general government activity was involved. For any borrowing transactions, reflect any necessary year-end interest accruals in your responses.

   1. Salaries of $5,100 were incurred and paid during the year. Another $200 for salaries was incurred but not paid as of year end.

   2. Charges for services rendered were billed (and received early the next fiscal year), $3,000.

   3. Borrowed $2,000 on a 1-year, 10%, interest-bearing note, due 3 months after year end.

   4. Principal ($2,000) and interest ($200) on the 1-year note were paid when due.

   5. Received a $200 transfer from another fund.

   6. Issued 10-year, 10% bonds payable for par of $1,000.

   7. Annual interest on the bonds ($100) was paid when dueat year end.

   8. Repaid the principal amount of a 5-year note, $800.

   9. Purchased a computer with a 3-year useful life for cash, $900.

   10. Straight-line depreciation of the computer is calculated to be $280 per year. The estimated residual value of the computer is $60.

   11. The computer is sold at the end of its useful life for $35. Original cost was $900.

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