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Question

Prepare journal entries to record the following grant-related transactions for a municipality special revenue fund.

1. Special Revenue Fund awarded an operating grant from the state, $2,500,000 (cash will be received after qualified expenditures are made).

2. Special Revenue Fund received funds of $1,600,000, temporarily transferred from the General Fund.

3. Incurred qualifying expenditures on the state grant program of $1,600,000 and paid them with funds temporarily transferred from the General Fund.

4. Received a federal grant to finance planting of trees in city, $4,500,000 (cash received in advance).

5. Incurred and paid cost of $3,000,000 for planting 10,000 trees in city.