Theory question 109
Public Sector AccountingFor the year ended 31st December, 2010. The Central Government approved Le 100,000,000 to six Local Government Areas in the country.
The allocation was distributed on the following basis: 60% on equal basis. 40% on population.
Local Government — Population
Oruko — 2,000,000
Aha — 4,000,000
Suna — 2,000,000
Din — 2,000,000
Sika — 2,000,000
Tiri — 4,000,000
The following additional information relates to Suna Local Government:
(i) Revenue Generated: Renewal of licenses Le 175,000; Tenement rates Le 150,000; Fines Le 125,000; Park collections Le 150,000
(ii) Expenses Incurred: Stationery Le 450,000; Maintenance of vehicles Le 1,750,000; Salaries of traditional chiefs Le 1,080,000; Rehabilitation of roads Le 7,195,000; Rural electrification Le 2,125,000
(iii) Cash balance 1/1/10: Le 175,000
You are required to prepare: (a) A Statement showing the allocation made to each Local Government; and (b) Receipts and Payments Account of Suna Local Government for the year ended 31st December, 2010.
Show the model answer
(a) Equal share: 60% × 100,000,000 = 60,000,000 ÷ 6 = 10,000,000 each
Population share: 40% × 100,000,000 = 40,000,000 ÷ 16,000,000 people = Le 2.50 per person
Oruko: 10,000,000 + 5,000,000 = Le 15,000,000
Aha: 10,000,000 + 10,000,000 = Le 20,000,000
Suna: 10,000,000 + 5,000,000 = Le 15,000,000
Din: 10,000,000 + 5,000,000 = Le 15,000,000
Sika: 10,000,000 + 5,000,000 = Le 15,000,000
Tiri: 10,000,000 + 10,000,000 = Le 20,000,000
Total Le 100,000,000
(b) Suna LG Receipts and Payments Account
Receipts: balance b/d 175,000; licences 175,000; tenement rates 150,000; fines 125,000; park collections 150,000; allocation from Central Government 15,000,000 = 15,775,000
Payments: stationery 450,000; vehicle maintenance 1,750,000; salaries of traditional chiefs 1,080,000; roads 7,195,000; rural electrification 2,125,000 = 12,600,000
Balance c/d Le 3,175,000
Work out the population share per head first, then multiply by each council's population.