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Governmental Accounting (ACC 3363) Financial Statement Project Fall 2017 Instructions: You are the Chief Financial Officer for the City of Monroe.You are to prepare financial

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Governmental Accounting (ACC 3363)

Financial Statement Project

Fall 2017

Instructions:

You are the Chief Financial Officer for the City of Monroe.You are to prepare financial statements for the City's governmental funds and proprietary funds as well as the government-wide financial statements.The City of Monroe uses fund accounting for internal record-keeping and makes year-end adjustments as necessary to prepare the government-wide statements.This project is presented in the same order as the textbook chapters 3 through 8.

Each chapter requires the preparation of journal entries to record the events and transactions of governmental and proprietary funds.For the General Fund, use control accounts for the budgetary accounts, revenues, expenditures and encumbrances.For all other funds, use separate accounts for each type of revenue and expenditure/expense.At appropriate stages, preparation of the fund and government-wide statements is noted. The following funds are included in this project:

Governmental Funds

General

Special revenue?Street and Highway Fund

Capital projects?City Hall Annex Construction Fund

Debt service?City Jail Annex Debt Service Fund

Debt service?City Hall Debt Service Fund

Proprietary Funds

Internal service?Stores and Services Fund

Enterprise?Water and Sewer Fund

An excel template is provided on TRACS (ACC3363_ProjectTemplate.xlsx).Separate worksheets have been created and color-coded for each section of this project (see instructions tab in excel template).All beginning balances have already been entered into appropriate general ledger accounts in the template.

Submission Instructions:

Your project should be completed using the Excel template found on TRACS under the Resources/CAFR Project folder.Save your completed project in Excel using the following naming convention, "LastName_FirstInitial.xls."Submit an electronic copy of your project to the dropbox folder on TRACS.Your submission is due December 5, 2017 by 5:00 PM.

You are allowed to work with other students, but each student must submit his/her own project.

Chapter 3 - City of Monroe Budget

Record the following entries to establish the budget for the City of Monroe.Use control accounts for the budgetary accounts, revenues, expenditures and encubramces (subsidiary accounts are not required).Budget information for the City includes:

Entry Reference

3.1As of January 1, 2017, the City Council approved and the mayor signed a budget calling for $11,150,000 in property tax and other revenue, $9,350,000 in appropriations for expenditures, and $1,700,000 to be transferred to two debt service funds for the payment of principal and interest. Record the budget for the General Fund and post to the ledger. (Enter this on the tab "GF - Journal & GL" in the Excel template)

3.2Also as of January 1, 2017, the City Council approved and the mayor signed a budget for the Street and Highway Fund that provided for estimated revenues from the state government in the amount of $1,068,000 and appropriations of $1,047,000. Record the budget and post to the ledger.(Enter this on the tab "SRF - Journal & GL" in the Excel template)

Ch. 4 Part 1 - General Fund

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.Round any computations to the nearest dollar.Use control accounts for revenues, expenditures, and budgetary accounts (subsidiary accounts are not required).

Entry Reference

4.1.1Encumbrances of $ 17,000 for purchase orders outstanding at the end of 2016 were re-established.

4.1.2The January 1, 2017, balance in Deferred Inflows - Property Taxes relates to the amount of the 2016 levy that was expected to be collected more than 60 days after December 31. This amount should be recognized as 2017 revenues.

4.1.3A general tax levy in the amount of $6,800,000 was made. It is estimated that 2 percent (.0225) of the tax will be uncollectible.

4.1.4Tax anticipation notes in the amount of $500,000 were issued.

4.1.5Goods and supplies related to all encumbrances outstanding as of December 31, 2016 were received, along with invoices amounting to $16,600; the invoices were approved for payment.The City maintains immaterial amounts in supply inventories and it is the practice of the City to charge supplies to expenditure when received.

4.1.6All accounts payable and the amount due other funds were paid.

4.1.7The General Fund collected the following ($ 10,811,500) in cash:

prior year taxes, $158,000;

interest and penalties receivable on prior year taxes, $3,500;

current taxes, $6,400,000;

$210,000 previously recorded as due from the state government;

licenses and permits, $800,000;

sales taxes, $2,890,000; and

miscellaneous revenues, $350,000.

4.1.8Purchase orders and contracts were issued in the amount of $3,465,000.

4.1.9Payrolls for the General Fund totaled $5,070,000. Of that amount, $498,000 were withheld for employees' federal income taxes and $357,000 were withheld for employees' FICA and Medicare tax liability; the balance was paid in cash. The encumbrance system is not used for payrolls.

4.1.10The liability for the city's share of FICA and Medicare taxes, $357,000, was recorded as was the liability for state unemployment taxes in the amount of $28,000.

4.1.11Invoices for most of the supplies and services ordered in transaction 8 were received in the amount of $3,375,300 and approved for payment. The related encumbrance amounted to $3,407,000.

4.1.12Tax anticipation notes were paid at maturity, along with interest in the amount of $18,000.

4.1.13Notification was received that an unrestricted state grant in the amount of $332,000 would be received during the first month of the next year.

4.1.14The General Fund recorded a liability to the Water and Sewer Fund for services in the amount of $37,000 and to the Stores and Services Fund for supplies in the amount of $313,200; $310,000 of the amount due the Stores and Services Fund was paid.

4.1.15The General Fund recorded an amount due of $52,000 from the state government, representing sales taxes to be collected from retail sales taking place during the last week of the year.

4.1.16The General Fund paid accounts payable in the amount of $3,175,000 and paid the amounts due the federal and state governments. The General Fund also transferred to the debt service funds cash in the amount of $1,662,000 for the recurring payment of principal and interest.

4.1.17All required legal steps were accomplished to increase appropriations by the net amount of $109,000. Estimated revenues were increased by $73,000.

4.1.18The City Council authorized a write-off of $51,000 in delinquent property taxes and corresponding interest and penalties amounting to $1,600.

4.1.19Interest and penalties receivable on taxes were accrued in the amount of $17,200; $1,100 of this amount is expected to be uncollectible.

4.1.20It is estimated that $10,500 of the outstanding taxes receivable will be collected more than 60 days beyond the fiscal year-end.

Closing entries: Prepare and post the closing entries for the General Fund (there is a separate tab in the template for these entries).Outstanding encumbrances at year end are classified as Assigned Fund Balance and all remaining net resources are classified as Unassigned Fund Balance.

The column for the General Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet.Confirm that the revenue and expenditure control accounts agree with the following detail:

Revenues

Expenditures

Property Taxes . . . . . .

$6,657,500

General Government . . .

$1,646,900

Sales Taxes

2,942,000

Public Safety . . . . . . . . .

3,026,900

Interest and Penalties on Taxes . . . . . . . . . . .

16,100

Highways and Streets . .

1,441,400

Licenses and Permits .

800,000

Sanitation . . . . . . . . . . . .

591,400

Intergovernmental Revenue . . . . . . . . . . .

332,000

Health . . . . . . . . . . . . . .

724,100

Miscellaneous Revenue

350,000

Welfare . . . . . . . . . . . . .

374,300

Total . . . . . . . . . . . .

$11,097,600

Culture and Recreation .

917,300

Capital Outlay . . . . . . . .

492,800

Total . . . . . . . . . . . . .

$9,215,100

Ch. 4 Part 2 - Special Revenue Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.Round any computations to the nearest dollar.As there are relatively few revenues and expenditures, make entries directly to individual revenue and expenditure accounts (do not use control accounts).

Entry Reference

4.2.1The state government notified the City that $1,065,000 will be available for street and highway maintenance during 2017 (i.e. the City has met eligibility requirements). The funds are not considered reimbursement-type as defined by GASB standards.

4.2.2Cash in the total amount of $997,000 was received from the state government.

4.2.3Contracts, all eligible for payment from the Street and Highway Fund, were signed in the amount of $1,062,000.

4.2.4Contractual services (see transaction 3) were received; the related contracts amounted to $1,042,000. Invoices amounting to $1,040,500 for these items were approved for payment. The goods and services all were for street and highway maintenance.

4.2.5Investment revenue of $5,120 was earned and received.

4.2.6Accounts payable were paid in the amount of $923,000.

4.2.7All required legal steps were accomplished to increase appropriations in the amount of $4,500.

Closing Entries: Prepare and post the closing entries for the Street and Highway Fund (there is a separate tab in the template for these entries).

The column for the Street and Highway Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet.

Chapter 5 Part 1 - Capital Projects Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.The voters of the City of Monroe approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City Jail.Architects were to be retained, and construction was to be completed by outside contractors.In addition to the bond proceeds, a $1,340,000 grant was expected from the state government.

Entry Reference

5.1.1On January 1, 2017, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $200,000 premium.Principal amounts of $200,000 each will come due annually over a 20-year period commencing January 1, 2018. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2017. The premium was transferred to the City Jail Debt Service Fund for the future payment of principal on the bonds.

5.1.2The receivable from the state government was recorded.

5.1.3Legal and engineering fees early in the project were paid in the amount of $121,000. This amount had not been encumbered.

5.1.4Architects were engaged at a fee of $250,000.

5.1.5Preliminary plans were approved, and the architects were paid $50,000 (20 percent of the fee).

5.1.6The complete plans and specifications were received from the architects and approved. A liability in the amount of $150,000 to the architects was approved and paid.

5.1.7Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a contract was signed.

5.1.8The contractor required partial payment of $1,350,000. Payment was approved and vouchered with the exception of a 5 percent retainage.

5.1.9Cash in the full amount of the grant was received from the state government.

5.1.10Furniture and equipment for the annex were ordered at a total cost of $459,500.

5.1.11Payment was made to the contractor for the amount payable (see 8 above).

5.1.12The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was approved for payment and then paid.

5.1.13The furniture and equipment were received at a total actual installed cost of $459,300. Invoices were approved for payment.

5.1.14The remainder of the architects' fees was approved for payment.

5.1.15The City Jail Construction Fund paid all outstanding accounts payables ($ 509,300) on December 31, 2017.

5.1.16The remaining cash was transferred to the City Jail Debt Service Fund.

Closing Entries: Prepare and post the closing entries for the City Jail Construction Fund (there is a separate tab in the template for these entries).

The column for the City Jail Construction Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet.

Chapter 5 Part 2 - Existing Debt Service Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service a $16,000,000, 3 percent tax-supported bond issue. As of December 31, 2016, this serial bond issue had a balance of $12,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 and July 1 of each year.

As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2017, were Cash with Fiscal Agent and Fund Balance?Assigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2016 in order to be able to pay bond principal and interest due on January 1, 2017.) The government chose not to accrue interest payable.

Entry Reference

5.2.1The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day.

5.2.2Cash in the amount of $574,000 was received from the General Fund on June 30 and was transferred to the fiscal agent.

5.2.3The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest of $ 174,000 due that day and $400,000 in checks were mailed for bonds maturing that day.

5.2.4Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). The government elected to not accrue the interest or principal at year-end.

Closing Entries: Prepare and post the closing entries for the City Hall Debt Service Fund (there is a separate tab in the template for these entries).

The column for the City Hall Debt Service Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet.

Chapter 5 Part 3 - New Debt Service Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.On the advice of the city attorney, a City Jail Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2017 (see Chapter 5 Part 1).

Entry Reference

5.3.1The premium described in transaction 5.1.1 was received as a transfer from the capital projects fund.

5.3.2Cash in the amount of $160,000 was received from the General Fund on June 30 and was transferred to the fiscal agent.

5.3.3The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day.

5.3.4The transfer described in transaction 5.1.16 was received.

5.3.5Cash in the amount of $360,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for interest and principal payments due on January 1 (next fiscal year). The government elected to not accrue the interest at year-end.

5.3.6$ 200,000 of the remaining cash on hand was invested.

Closing Entries: Prepare and post the closing entries for the City Jail Debt Service Fund (there is a separate tab in the template for these entries).

The column for the City Jail Debt Service Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet.

Governmental Funds Financial Statements

Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the governmental funds for the City of Monroe for the year ended December 31, 2017.Include the General Fund, the Street and Highway Fund, the City Hall Debt Service Fund, the City Jail Debt Service Fund, and the City Jail Construction Fund.

Prepare a Balance Sheet for the governmental funds for the City of Monroe as of December 31, 2017.Include the General Fund, the Street and Highway Fund, the City Hall Debt Service Fund, and the City Jail Debt Service Fund.

Chapter 6 Part 1 - Internal Service Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.

Entry Reference

6.1.1A budget was prepared for FY 2017. It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven for the year.

6.1.2The amount due from other funds as of January 1, 2017, was collected in full.

6.1.3During the year, supplies were ordered and received in the amount of $307,000. This amount was posted to accounts payable.

6.1.4$15,000 of the advance from the Water and Sewer Fund, originally provided for construction, was repaid. No interest is charged.

6.1.5During the year, supplies costing $250,560 were issued to the General Fund, and supplies costing $46,400 were issued to the Water Utility Fund.These funds were charged based on the previously determined markup ($ 313,200 to General Fund and 58,000 to the Water and Sewer Fund).

6.1.6Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $15,000; Warehousing, $16,900; Delivery, $17,500; and Administrative, $9,000.

6.1.7Cash was received from the General Fund in the amount of $310,000 and from the Water and Sewer Fund in the amount of $50,000.

6.1.8Accounts payable were paid in the amount of $365,000.

6.1.9Depreciation in the amount of $10,000 was recorded for buildings and $4,600 for equipment.

Closing Entries: Prepare and post the closing entries for the Stores and Service Fund (there is a separate tab in the template for these entries).Assume there is no Restricted Net Position when computing the balance in the net position account.

The column for the Stores and Service Fund can now be completed in both the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position and the Proprietary Funds Statement of Net Position.

Chapter 6 Part 2 - Enterprise Fund Transactions

Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger.

Entry Reference

6.2.1During the year, sales of water to non-government customers amounted to $1,018,000 and sales of water to the General Fund amounted to $37,000.

6.2.2Collections from non-government customers amounted to $976,000.

6.2.3The Stores and Services Fund repaid $15,000 of the long-term advance to the Water and Sewer Fund.

6.2.4Materials and supplies in the amount of $261,000 were received. A liability in that amount was recorded.

6.2.5Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $169,500; selling, $15,000; administration, $18,000; construction work in progress, $50,000.

6.2.6Payroll costs for the year totaled $416,200 plus $34,200 for the employer's share of payroll taxes. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $265,800; sales, $43,900; administration, $91,400; construction work in progress, $49,300.

6.2.7Bond interest (6%) in the amount of $162,500 was paid.

6.2.8Interest in the amount of $17,000 (included in 6.2.7 above) was reclassified to Construction Work in Progress.

6.2.9Construction projects at the water treatment plant (reflected in the beginning balance of construction in process) were completed in the amount of $203,000, and the assets were placed in service. Payments for these amounts were made in the previous year (no effect on 2017 Statement of Cash Flows).

6.2.10Collection efforts were discontinued on bills totaling $2,890. The unpaid receivables were written off.

6.2.11An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $5,500.

6.2.12Payment of accounts payable amounted to $302,000. Payments of payroll taxes totaled $95,200.

6.2.13Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies.

6.2.14Depreciation expense for the year was computed to be $282,000.

6.2.15In accord with the revenue bond indenture, $25,000 cash was transferred from operating cash to restricted assets.

Closing Entries: Prepare and post the closing entries for the Water and Sewer Fund (there is a separate tab in the template for these entries).When computing the balance in the Net Position account, assume the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets.

The column for the Water and Sewer Fund can now be completed in both the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position and the Proprietary Funds Statement of Net Position.

Proprietary Fund Financial Statements

Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Position for the Proprietary Funds for the City of Monroe for the year ended December 31, 2017.Include the Water and Sewer Fund and the Stores and Services Fund.

Prepare a Statement of Net Position for the Proprietary Funds for the City of Monroe as of December 31, 2017.Include the Water and Sewer Fund and the Stores and Services Fund.

Prepare a Statement of Cash Flows for the Proprietary Funds for the City of Monroe for the year ended December 31, 2017.Include the Water and Sewer fund and the Stores and Services Fund.Include restricted assets as a part of cash and cash equivalents for this statement.Assume any materials and labor attributable to construction in process were paid by year end.

Chapter 8 - Government-wide Statements

Adjustment Worksheet

Use a worksheet as illustrated in the text to adjust the governmental funds from modified-accrual accounting to full-accrual accounting basis.The balances from the governmental funds financial statements have already been entered for you and can be used as a check figure for the governmental fund financial statements.

Prepare the following worksheet entries and post to the worksheet.Identify each adjustment by the appropriate letter below:

Adjustment Reference

A.Record the January 1, 2017 balances of general fixed assets and related accumulated depreciation accounts. The City of Monroe had the following balances (excluding Internal Service Funds):

Cost

Accumulated

Depreciation

Totals

$ 64,200,000

28,700,000

B.Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

C.Depreciation expense (governmental activities) for the year totaled $ 4,900,000.

D.Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium.

E.As of January 1, 2017, the City of Monroe had $12,000,000 in general obligation bonds outstanding.

F.Eliminate the expenditures for bond principal.

G.Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2017. The computation is as follows: ($11,200,000 .03 6/12) + ($4,000,000 . 08 6/12) = $328,000).

H.Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2017 fund basis statements, ($12,000,000 .03 6/12) = $180,000.

I.Amortize bond premium in the amount of $ 10,000.

J.Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes.

K.Adjust for the $21,000 of property taxes that was deferred in 2016 and recognized as revenue in the 2017 fund-basis statements.

L.Assume the City adopted a policy in 2017 of allowing employees to accumulate compensated absences.Make an adjustment accruing the expense of $ 42,000 Charge compensated absences expense.

M.Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries).

N.No revenues from internal service funds were with external parties. Assume $3,200 of the $11,200 "Due from Other Funds" in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $3,200 interfund receivables.

O.Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount.

P.Eliminate transfers that are between departments reported within governmental activities.

Government-wide Statement of Activities

Prepare a Statement of Activities for the City of Monroe for the year ended December 31, 2017.For purposes of this statement assume the following:

$ 332,000 in the General Fund is a state grant specifically to support general government programs.

$ 1,065,000 in the Street and Highway Fund is an operating grant specifically for highway and street maintenance expenses.

$ 1,340,000 in the City Jail Construction Fund is a capital grant that applies to public safety.

Use the balances computed from the adjustment worksheet for the governmental activities portion of this statement.Use your solution from the Proprietary Fund financial statements from Chapter 6 above to complete the business activities portion (net any short-term interfund payables/receivables).

Government-wide Statement of Net Position

Prepare a Statement of Net Position for the City of Monroe as of December 31, 2017.Group all capital assets, net of depreciation.Include a breakdown in the Net Position section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted.For purposes of classifying net position for the governmental activities assume the following:

For the governmental activities net position invested in capital assets, net of related debt, the related debt includes the bonds payable, the premium on bonds payable, and the advance from the water utility fund.

The special revenue fund resources are restricted by the granting agency for street and highway maintenance.Assume $204,500 are the only restricted resources in the governmental activities.

Balance Sheet/Statement of Net Position Reconciliation

Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position in the government-wide Statement of Net position.

Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities Reconcilation

Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position in the government-wide Statement of Activities.

Congratulations!You are done with this project

image text in transcribed Governmental Accounting (ACC 3363) Financial Statement Project Fall 2017 Instructions: You are the Chief Financial Officer for the City of Monroe. You are to prepare financial statements for the City's governmental funds and proprietary funds as well as the governmentwide financial statements. The City of Monroe uses fund accounting for internal record-keeping and makes year-end adjustments as necessary to prepare the government-wide statements. This project is presented in the same order as the textbook chapters 3 through 8. Each chapter requires the preparation of journal entries to record the events and transactions of governmental and proprietary funds. For the General Fund, use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. For all other funds, use separate accounts for each type of revenue and expenditure/expense. At appropriate stages, preparation of the fund and government-wide statements is noted. The following funds are included in this project: Governmental Funds General Special revenueStreet and Highway Fund Capital projectsCity Hall Annex Construction Fund Debt serviceCity Jail Annex Debt Service Fund Debt serviceCity Hall Debt Service Fund Proprietary Funds Internal serviceStores and Services Fund EnterpriseWater and Sewer Fund An excel template is provided on TRACS (ACC3363_ProjectTemplate.xlsx). Separate worksheets have been created and color-coded for each section of this project (see instructions tab in excel template). All beginning balances have already been entered into appropriate general ledger accounts in the template. Submission Instructions: Your project should be completed using the Excel template found on TRACS under the Resources/CAFR Project folder. Save your completed project in Excel using the following naming convention, \"LastName_FirstInitial.xls.\" Submit an electronic copy of your project to the dropbox folder on TRACS. Your submission is due December 5, 2017 by 5:00 PM. You are allowed to work with other students, but each student must submit his/her own project. Chapter 3 - City of Monroe Budget Record the following entries to establish the budget for the City of Monroe. Use control accounts for the budgetary accounts, revenues, expenditures and encubramces (subsidiary accounts are not required). Budget information for the City includes: Entry Reference 1 As of January 1, 2017, the City Council approved and the mayor signed a budget calling for $11,150,000 in property tax and other revenue, $9,350,000 in appropriations for expenditures, and $1,700,000 to be transferred to two debt service funds for the payment of principal and interest. Record the budget for the General Fund and post to the ledger. (Enter this on the tab \"GF - Journal & GL\" in the Excel template) 2 Also as of January 1, 2017, the City Council approved and the mayor signed a budget for the Street and Highway Fund that provided for estimated revenues from the state government in the amount of $1,068,000 and appropriations of $1,047,000. Record the budget and post to the ledger. (Enter this on the tab \"SRF - Journal & GL\" in the Excel template) Ch. 4 Part 1 - General Fund Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. Round any computations to the nearest dollar. Use control accounts for revenues, expenditures, and budgetary accounts (subsidiary accounts are not required). Entry Reference 1 Encumbrances of $ 17,000 for purchase orders outstanding at the end of 2016 were re-established. 2 The January 1, 2017, balance in Deferred Inflows - Property Taxes relates to the amount of the 2016 levy that was expected to be collected more than 60 days after December 31. This amount should be recognized as 2017 revenues. 3 A general tax levy in the amount of $6,800,000 was made. It is estimated that 2 percent (.0225) of the tax will be uncollectible. 4 Tax anticipation notes in the amount of $500,000 were issued. 5 Goods and supplies related to all encumbrances outstanding as of December 31, 2016 were received, along with invoices amounting to $16,600; the invoices were approved for payment. The City maintains immaterial amounts in supply inventories and it is the practice of the City to charge supplies to expenditure when received. 6 All accounts payable and the amount due other funds were paid. 7 The General Fund collected the following ($ 10,811,500) in cash: prior year taxes, $158,000; interest and penalties receivable on prior year taxes, $3,500; current taxes, $6,400,000; $210,000 previously recorded as due from the state government; licenses and permits, $800,000; sales taxes, $2,890,000; and miscellaneous revenues, $350,000. 8 9 10 11 12 13 14 15 16 17 18 19 20 Purchase orders and contracts were issued in the amount of $3,465,000. Payrolls for the General Fund totaled $5,070,000. Of that amount, $498,000 were withheld for employees' federal income taxes and $357,000 were withheld for employees' FICA and Medicare tax liability; the balance was paid in cash. The encumbrance system is not used for payrolls. The liability for the city's share of FICA and Medicare taxes, $357,000, was recorded as was the liability for state unemployment taxes in the amount of $28,000. Invoices for most of the supplies and services ordered in transaction 8 were received in the amount of $3,375,300 and approved for payment. The related encumbrance amounted to $3,407,000. Tax anticipation notes were paid at maturity, along with interest in the amount of $18,000. Notification was received that an unrestricted state grant in the amount of $332,000 would be received during the first month of the next year. The General Fund recorded a liability to the Water and Sewer Fund for services in the amount of $37,000 and to the Stores and Services Fund for supplies in the amount of $313,200; $310,000 of the amount due the Stores and Services Fund was paid. The General Fund recorded an amount due of $52,000 from the state government, representing sales taxes to be collected from retail sales taking place during the last week of the year. The General Fund paid accounts payable in the amount of $3,175,000 and paid the amounts due the federal and state governments. The General Fund also transferred to the debt service funds cash in the amount of $1,662,000 for the recurring payment of principal and interest. All required legal steps were accomplished to increase appropriations by the net amount of $109,000. Estimated revenues were increased by $73,000. The City Council authorized a write-off of $51,000 in delinquent property taxes and corresponding interest and penalties amounting to $1,600. Interest and penalties receivable on taxes were accrued in the amount of $17,200; $1,100 of this amount is expected to be uncollectible. It is estimated that $10,500 of the outstanding taxes receivable will be collected more than 60 days beyond the fiscal year-end. Closing entries: Prepare and post the closing entries for the General Fund (there is a separate tab in the template for these entries). Outstanding encumbrances at year end are classified as Assigned Fund Balance and all remaining net resources are classified as Unassigned Fund Balance. The column for the General Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet. Confirm that the revenue and expenditure control accounts agree with the following detail: Revenues Property Taxes . . . . . . Sales Taxes Interest and Penalties on Taxes . . . . . . . . . . . Licenses and Permits . Intergovernmental Revenue . . . . . . . . . . . Miscellaneous Revenue Total . . . . . . . . . . . . $6,657,500 2,942,000 Expenditures General Government . . . $1,646,900 Public Safety . . . . . . . . . 3,026,900 16,100 800,000 Highways and Streets . . 1,441,400 Sanitation . . . . . . . . . . . . 591,400 332,000 Health . . . . . . . . . . . . . . 724,100 350,000 $11,097,600 Welfare . . . . . . . . . . . . . Culture and Recreation . Capital Outlay . . . . . . . . Total . . . . . . . . . . . . . 374,300 917,300 492,800 $9,215,100 Ch. 4 Part 2 - Special Revenue Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. Round any computations to the nearest dollar. As there are relatively few revenues and expenditures, make entries directly to individual revenue and expenditure accounts (do not use control accounts). Entry Reference 1 The state government notified the City that $1,065,000 will be available for street and highway maintenance during 2017 (i.e. the City has met eligibility requirements). The funds are not considered reimbursement-type as defined by GASB standards. 2 Cash in the total amount of $997,000 was received from the state government. 3 Contracts, all eligible for payment from the Street and Highway Fund, were signed in the amount of $1,062,000. 4 Contractual services (see transaction 3) were received; the related contracts amounted to $1,042,000. Invoices amounting to $1,040,500 for these items were approved for payment. The goods and services all were for street and highway maintenance. 5 Investment revenue of $5,120 was earned and received. 6 Accounts payable were paid in the amount of $923,000. 7 All required legal steps were accomplished to increase appropriations in the amount of $4,500. Closing Entries: Prepare and post the closing entries for the Street and Highway Fund (there is a separate tab in the template for these entries). The column for the Street and Highway Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet. Chapter 5 Part 1 - Capital Projects Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. The voters of the City of Monroe approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City Jail. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $1,340,000 grant was expected from the state government. Entry Reference 1 On January 1, 2017, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $200,000 premium. Principal amounts of $200,000 each will come due annually over a 20-year period commencing January 1, 2018. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2017. The premium was transferred to the City Jail Debt Service Fund for the future payment of principal on the bonds. 2 The receivable from the state government was recorded. 3 Legal and engineering fees early in the project were paid in the amount of $121,000. This amount had not been encumbered. 4 Architects were engaged at a fee of $250,000. 5 Preliminary plans were approved, and the architects were paid $50,000 (20 percent of the fee). 6 The complete plans and specifications were received from the architects and approved. A liability in the amount of $150,000 to the architects was approved and paid. 7 Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a contract was signed. 8 The contractor required partial payment of $1,350,000. Payment was approved and vouchered with the exception of a 5 percent retainage. 9 Cash in the full amount of the grant was received from the state government. 10 Furniture and equipment for the annex were ordered at a total cost of $459,500. 11 Payment was made to the contractor for the amount payable (see 8 above). 12 The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was approved for payment and then paid. 13 The furniture and equipment were received at a total actual installed cost of $459,300. Invoices were approved for payment. 14 The remainder of the architects' fees was approved for payment. 15 The City Jail Construction Fund paid all outstanding accounts payables ($ 509,300) on December 31, 2017. 16 The remaining cash was transferred to the City Jail Debt Service Fund. Closing Entries: Prepare and post the closing entries for the City Jail Construction Fund (there is a separate tab in the template for these entries). The column for the City Jail Construction Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet. Chapter 5 Part 2 - Existing Debt Service Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service a $16,000,000, 3 percent tax-supported bond issue. As of December 31, 2016, this serial bond issue had a balance of $12,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 and July 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2017, were Cash with Fiscal Agent and Fund BalanceAssigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2016 in order to be able to pay bond principal and interest due on January 1, 2017.) The government chose not to accrue interest payable. Entry Reference 1 The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. 2 Cash in the amount of $574,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. 3 The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest of $ 174,000 due that day and $400,000 in checks were mailed for bonds maturing that day. 4 Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). The government elected to not accrue the interest or principal at year-end. Closing Entries: Prepare and post the closing entries for the City Hall Debt Service Fund (there is a separate tab in the template for these entries). The column for the City Hall Debt Service Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet. Chapter 5 Part 3 - New Debt Service Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. On the advice of the city attorney, a City Jail Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2017 (see Chapter 5 Part 1). Entry Reference 1 The premium described in transaction 5.1.1 was received as a transfer from the capital projects fund. 2 Cash in the amount of $160,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. 3 The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day. 4 The transfer described in transaction 5.1.16 was received. 5 Cash in the amount of $360,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for interest and principal payments due on January 1 (next fiscal year). The government elected to not accrue the interest at year-end. 6 $ 200,000 of the remaining cash on hand was invested. Closing Entries: Prepare and post the closing entries for the City Jail Debt Service Fund (there is a separate tab in the template for these entries). The column for the City Jail Debt Service Fund can now be completed in both the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance and Governmental Funds Balance Sheet. Governmental Funds Financial Statements Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the governmental funds for the City of Monroe for the year ended December 31, 2017. Include the General Fund, the Street and Highway Fund, the City Hall Debt Service Fund, the City Jail Debt Service Fund, and the City Jail Construction Fund. Prepare a Balance Sheet for the governmental funds for the City of Monroe as of December 31, 2017. Include the General Fund, the Street and Highway Fund, the City Hall Debt Service Fund, and the City Jail Debt Service Fund. Chapter 6 Part 1 - Internal Service Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. Entry Reference 1 A budget was prepared for FY 2017. It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven for the year. 2 The amount due from other funds as of January 1, 2017, was collected in full. 3 During the year, supplies were ordered and received in the amount of $307,000. This amount was posted to accounts payable. 4 5 6 7 8 9 $15,000 of the advance from the Water and Sewer Fund, originally provided for construction, was repaid. No interest is charged. During the year, supplies costing $250,560 were issued to the General Fund, and supplies costing $46,400 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup ($ 313,200 to General Fund and 58,000 to the Water and Sewer Fund). Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $15,000; Warehousing, $16,900; Delivery, $17,500; and Administrative, $9,000. Cash was received from the General Fund in the amount of $310,000 and from the Water and Sewer Fund in the amount of $50,000. Accounts payable were paid in the amount of $365,000. Depreciation in the amount of $10,000 was recorded for buildings and $4,600 for equipment. Closing Entries: Prepare and post the closing entries for the Stores and Service Fund (there is a separate tab in the template for these entries). Assume there is no Restricted Net Position when computing the balance in the net position account. The column for the Stores and Service Fund can now be completed in both the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position and the Proprietary Funds Statement of Net Position. Chapter 6 Part 2 - Enterprise Fund Transactions Record journal entries for the following transactions for fiscal year 2017 and post them to the general ledger. Entry Reference 1 During the year, sales of water to non-government customers amounted to $1,018,000 and sales of water to the General Fund amounted to $37,000. 2 Collections from non-government customers amounted to $976,000. 3 The Stores and Services Fund repaid $15,000 of the long-term advance to the Water and Sewer Fund. 4 Materials and supplies in the amount of $261,000 were received. A liability in that amount was recorded. 5 Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $169,500; selling, $15,000; administration, $18,000; construction work in progress, $50,000. 6 Payroll costs for the year totaled $416,200 plus $34,200 for the employer's share of payroll taxes. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $265,800; sales, $43,900; administration, $91,400; construction work in progress, $49,300. 7 Bond interest (6%) in the amount of $162,500 was paid. 8 9 10 11 12 13 14 15 Interest in the amount of $17,000 (included in 6.2.7 above) was reclassified to Construction Work in Progress. Construction projects at the water treatment plant (reflected in the beginning balance of construction in process) were completed in the amount of $203,000, and the assets were placed in service. Payments for these amounts were made in the previous year (no effect on 2017 Statement of Cash Flows). Collection efforts were discontinued on bills totaling $2,890. The unpaid receivables were written off. An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $5,500. Payment of accounts payable amounted to $302,000. Payments of payroll taxes totaled $95,200. Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies. Depreciation expense for the year was computed to be $282,000. In accord with the revenue bond indenture, $25,000 cash was transferred from operating cash to restricted assets. Closing Entries: Prepare and post the closing entries for the Water and Sewer Fund (there is a separate tab in the template for these entries). When computing the balance in the Net Position account, assume the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets. The column for the Water and Sewer Fund can now be completed in both the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position and the Proprietary Funds Statement of Net Position. Proprietary Fund Financial Statements Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Position for the Proprietary Funds for the City of Monroe for the year ended December 31, 2017. Include the Water and Sewer Fund and the Stores and Services Fund. Prepare a Statement of Net Position for the Proprietary Funds for the City of Monroe as of December 31, 2017. Include the Water and Sewer Fund and the Stores and Services Fund. Prepare a Statement of Cash Flows for the Proprietary Funds for the City of Monroe for the year ended December 31, 2017. Include the Water and Sewer fund and the Stores and Services Fund. Include restricted assets as a part of cash and cash equivalents for this statement. Assume any materials and labor attributable to construction in process were paid by year end. Chapter 8 - Government-wide Statements Adjustment Worksheet Use a worksheet as illustrated in the text to adjust the governmental funds from modifiedaccrual accounting to full-accrual accounting basis. The balances from the governmental funds financial statements have already been entered for you and can be used as a check figure for the governmental fund financial statements. Prepare the following worksheet entries and post to the worksheet. Identify each adjustment by the appropriate letter below: Adjustment Reference A Record the January 1, 2017 balances of general fixed assets and related accumulated depreciation accounts. The City of Monroe had the following balances (excluding Internal Service Funds): Totals Cost $ 64,200,000 Accumulated Depreciation 28,700,000 B Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. C Depreciation expense (governmental activities) for the year totaled $ 4,900,000. D Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium. E As of January 1, 2017, the City of Monroe had $12,000,000 in general obligation bonds outstanding. F Eliminate the expenditures for bond principal. G Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2017. The computation is as follows: ($11,200,000 .03 6/12) + ($4,000,000 . 08 6/12) = $328,000). H Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2017 fund basis statements, ($12,000,000 .03 6/12) = $180,000. I Amortize bond premium in the amount of $ 10,000. J Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes. K Adjust for the $21,000 of property taxes that was deferred in 2016 and recognized as revenue in the 2017 fund-basis statements. L Assume the City adopted a policy in 2017 of allowing employees to accumulate compensated absences. Make an adjustment accruing the expense of $ 42,000 Charge compensated absences expense. M Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries). N No revenues from internal service funds were with external parties. Assume $3,200 of the $11,200 \"Due from Other Funds\" in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $3,200 interfund receivables. O Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount. P Eliminate transfers that are between departments reported within governmental activities. Government-wide Statement of Activities Prepare a Statement of Activities for the City of Monroe for the year ended December 31, 2017. For purposes of this statement assume the following: $ 332,000 in the General Fund is a state grant specifically to support general government programs. $ 1,065,000 in the Street and Highway Fund is an operating grant specifically for highway and street maintenance expenses. $ 1,340,000 in the City Jail Construction Fund is a capital grant that applies to public safety. Use the balances computed from the adjustment worksheet for the governmental activities portion of this statement. Use your solution from the Proprietary Fund financial statements from Chapter 6 above to complete the business activities portion (net any short-term interfund payables/receivables). Government-wide Statement of Net Position Prepare a Statement of Net Position for the City of Monroe as of December 31, 2017. Group all capital assets, net of depreciation. Include a breakdown in the Net Position section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted. For purposes of classifying net position for the governmental activities assume the following: For the governmental activities net position invested in capital assets, net of related debt, the related debt includes the bonds payable, the premium on bonds payable, and the advance from the water utility fund. The special revenue fund resources are restricted by the granting agency for street and highway maintenance. Assume $204,500 are the only restricted resources in the governmental activities. Balance Sheet/Statement of Net Position Reconciliation Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position in the government-wide Statement of Net position. Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities Reconcilation Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position in the government-wide Statement of Activities. Congratulations! You are done with this project

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