Theory question 109
Public Sector AccountingThe following balances have been extracted from the books of Agbo State as at 31st December, 2010 (Le):
Cash Account: Dr 50,000
Consolidated Revenue Fund – 01/01/2010: Cr 90,000
Allocation from Central Government Account: Cr 200,000
Other revenue: Cr 20,000
Personnel costs: Dr 100,000
Investment: Dr 100,000
Deposit: Cr 50,000
Advances: Dr 60,000
Loans from Central Government: Cr 50,000
Loans to Local Government: Dr 60,000
Fixed deposit: Dr 40,000
Totals (as printed): 400,000 / 400,000
Additional information: (i) Le 20,000 should be transferred to Development Fund for capital projects. (ii) Other charges approved by the Funds Management Committee and paid during the year but which were omitted from the books amounted to Le 25,000. (iii) Total grants of Le 80,000 collected from Central Government for capital projects to be embarked upon during the year had not been recorded in the books.
You are required to prepare: (a) Consolidated Revenue Fund Account; (b) a Statement showing the Development Fund for the year.
Show the model answer
(a) Consolidated Revenue Fund Account for the year ended 31 Dec 2010: balance b/f 90,000 + allocation from Central Government 200,000 + other revenue 20,000 = Le 310,000; less personnel costs 100,000, transfer to Development Fund 20,000, other charges 25,000 = 145,000; balance c/f Le 165,000
(b) Statement of Development Fund for the year ended 31 Dec 2010: transfer from Consolidated Revenue Fund 20,000 + grants from Central Government 80,000 = Le 100,000
Add the omitted other charges and the transfer to the Development Fund to the CRF expenditure; the grants for capital projects go to the Development Fund.