Theory question 102
Public Sector AccountingSection B (Answer any three questions from this section)
Government approved for the year ended 31st December, 1989, ₦10,000,000 to ten local authorities of the federation. The allocation was distributed as follows: (a) 80% on population basis and (b) 20% on equality of local authorities
Local Authority and Population: A 200,000; B 450,000; C 300,000; D 375,000; E 680,000; F 490,000; G 320,000; H 350,000; I 375,000; J 460,000; Total 4,000,000
Local Authority E generated the following additional revenue during the year: Fines ₦25,000; Licenses ₦15,000; Parks Operations ₦1,000; Rates ₦17,500
it also made the following payments: Salaries and wages ₦25,000; Electricity ₦2,000; Stationery ₦5,000; Servicing of vehicles ₦36,000
Prepare: (i) A statement of allocation made to each of the local authorities and (ii) Receipts and Payments Accounts of Local Authority "E" for the year ended 31st December 1989.
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(i) Population share 80% × 10,000,000 = 8,000,000 ÷ 4,000,000 people = ₦2 per head; equality share 20% = 2,000,000 ÷ 10 = ₦200,000 each
Allocation (population + equality = total): A 400,000 + 200,000 = 600,000; B 900,000 + 200,000 = 1,100,000; C 600,000 + 200,000 = 800,000; D 750,000 + 200,000 = 950,000; E 1,360,000 + 200,000 = 1,560,000; F 980,000 + 200,000 = 1,180,000; G 640,000 + 200,000 = 840,000; H 700,000 + 200,000 = 900,000; I 750,000 + 200,000 = 950,000; J 920,000 + 200,000 = 1,120,000; total ₦10,000,000
(ii) Local Authority E: Receipts and Payments Account for the year ended 31 December 1989
Receipts: allocation on population 1,360,000; on equality 200,000; fines 25,000; licences 15,000; parks 1,000; rates 17,500; total 1,618,500
Payments: salaries and wages 25,000; electricity 2,000; stationery 5,000; servicing of vehicles 36,000; total 68,000
Balance c/d ₦1,550,500
Work out the rate per head first (₦2), then add the equal share of ₦200,000 to each authority.