Exercise 10-2: (Net Position Components) Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net position of a proprietary fund and on each net position component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in fund net position of a proprietary fund. A sample transaction is analyzed for you. Sample Transaction: Purchase of equipment costing $5,000 with unrestricted cash.

Note as stated in the exercise Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in fund net position of a proprietary fund.

1. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted).

2. Land costing $500,000 was purchased by issuing a five-year, 8% note payable for $450,000. The balance was paid from cash restricted for an expansion project.

3. Depreciation expense for the year was $200,000.

4. Interest expense of $36,000 on the note in transaction 2 was paid from unrestricted resources.

5. Bonds payable of $200,000 were repaid from restricted resources, along with $50,000 of interest. The bonds were issued several years earlier to finance capital asset construction.

6. A capital grant of $500,000 was received, but no qualifying costs have been incurred.

7. $300,000 of the restricted capital grant from transaction 6 was expended for its intended purpose.

8. Sales revenues amounted to $1,000,000.

9. Interest revenues restricted to the use of the Enterprise Fund, $40,000, were received.

10. The cost of materials and supplies used for the year was $75,000.

Solution: E10-2

		Net Position
Transaction Number	Affect Operating Statement ($)	Unrestricted ($)	Restricted ($)	Net Investment in Capital Assets ($)	Total ($)
Sample	No	$(5,000)	_	+ $5,000	_