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On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water purification plant for its Water Enterprise Fund. 1. The bond issuance should be reflected in the Water Fund Statement of Revenues, Expenses, and Changes in Fund Net Position as o o b. other financing sources of $102 million. o c. revenues of $100 million. o a. revenues of $102 million. d. The transaction does not affect this statement. 2. What effect will the bond premium amortization have on interest expense in 20X7, assuming straight-line amortization is used where appropriate? o o b. Increase interest expense by $100,000. o c. Decrease interest expense by $100,000. o a. No effect. d. Decrease interest expense and increase transfers from Debt Service Funds by $2,000,000. 3. Assume that at the fiscal year end the capital project had not yet begun; thus the debt proceeds were still unspent. What classifications of net position would be affected by this fact? o o b. Restricted net position would include the unspent cash as well as the outstanding liability. o c. Unrestricted net position would reflect an increase due to the cash received from the debt issuance, but net investment in capital assets would decrease by the amount of unspent debt proceeds. o a. Net investment in capital assets would be reduced because no capital assets have been added to offset the new capital-related debt. d. Nonenet position classifications are not affected by the issuance of long-term debt. 4. How would the Enterprise Fund's statement of cash flows be affected by the debt issuance? o a. Cash flows from operating activities would increase. o b. Cash flows from noncapital financing activities would increase because bond proceeds have not yet been spent for capital purposes. o c. Cash flows from capital financing activities would increase. o d. Cash flows from investing activities would increase. Questions 5 through 7 are based on the following scenario: The town of Brittainville has two Enterprise Fundsone for its water and wastewater operations and another for its cable television operation. The Water and Wastewater 433434Enterprise Fund issued $11,000,000 of 6%, 15-year refunding bonds at par during the year. It also received a $175,000 federal grant to expand water and wastewater lines to economically depressed residential neighborhoods. The Cable Enterprise Fund made its annual payment of $1,000,000 to the General Fund to subsidize operations. It also was the recipient of a Federal Communications Commission unrestricted grant of $100,000. 5. How would the receipt of the grants be reported on the statement of cash flows for the Water and Wastewater Enterprise Fund and the Cable Enterprise Fund, respectively? Page to the specified printed page number Activate the following button to retrieve the URL to cite or link to this page o o b. Assuming the Cable Enterprise Fund chose to use the proceeds of its grant for capital needs, both funds would reflect the grant receipt in cash flows from capital and related financing activities. o c. Cash flows from capital and related financing activities for the Water and Wastewater Enterprise Fund and cash flows from operating activities for the Cable Enterprise Fund. o a. Cash flows from capital and related financing activities for the Water and Wastewater Enterprise Fund and cash flows from noncapital financing activities for the Cable Enterprise Fund. d. Both funds would report the grant receipt as cash flows from operating activities. 6. How will the interfund payment be reported on the Cable Enterprise Fund's operating statement? o o b. Operating expense of $1,000,000. o c. Nonoperating expense of $1,000,000. o a. Transfer out of $1,000,000. d. Capital contribution out of $1,000,000. 7. How would the changes in net position amount be affected in the Water and Wastewater Enterprise Fund by the transactions listed? o a. Changes in net position would not be affected by the debt issuance; the grant would increase changes in net position. o b. Changes in net position would be decreased by any costs associated with issuing the refunding bonds; the grant would increase changes in net position. o c. Both the refunding transaction and the grant would not affect the changes in net position. o d. Changes in net position would not be affected by either transaction. Questions 8 through 10 are based on the following facts about an Enterprise Fund for a utility operation: Outstanding bonds issued for capital improvements $ 10,500,000 Transfer to General Fund (occurs annually) 500,000 Charges for services earned in the current year 14,600,750 Unspent capital bond issue proceeds 4,000,000 Salaries and wages expense for the current year 9,600,000 Interest earnings on all investments 600,000 Fair market value of water lines donated by a local developer 1,000,000 Net book value of all other existing capital assets 8. Net investment in capital assets would be o a. $7,310,500. o b. $8,310,500. o c. $4,310,500. o d. $1,810,500. 9. Cash flows for noncapital financing activities would decrease o a. $0. o b. $10,100,000. o c. $9,500,000. o 7,310,500 d. $500,000. 10. The operating statement of the Enterprise Fund would not be directly affected by o a. the amount of unspent bond proceeds at the end of the year. o b. the donation by the local developer. o c. the transfer to the General Fund. o d. Interest earnings on investments. Cash Flow Statement Classifications) Use the letter beside the appropriate cash flow statement classification to indicate the section of the cash flow statement in which each of the following transactions of an Internal Service Fund should be reported. a. Cash flows from operating activities. b. Cash flows from noncapital financing activities. c. Cash flows from capital and related financing activities. d. Cash flows from investing activities. e. Either b or c, additional information required. Explain. f. None of the above. Explain. o 1. Cash purchase of equipment o 2. Transfer received from the General Fund o 3. Payment of accounts payable created by the acquisition of supplies on credit o 4. A cash contribution by the General Fund for the purpose of financing half the cost of new equipment o 5. Payment of capital lease payments o 6. Cash received from the collection of billings to other departments o 7. Cash paid for investments in bonds of other governments o 8. Transfer to another fund o 9. Cash received from borrowing on a short-term basis for operations o 10. Interest paid on the short-term borrowing a. Prepare the general journal entries required to record the following transactions in the general ledgers of the state, the County General Fund, and the County Tax Agency Fund. You may omit formal entry explanations but should key the entries to the numbered items in this problem. o o 2. Collections were $300,000 for the county and $240,000 for the state. o 3. The county is entitled to a fee of 1% of taxes collected for other governments. The amounts due to the state and to the County General Fund are paid except for the collection fee due to the County General Fund. o 4. The fee is transmitted from the Tax Agency Fund to the County General Fund. o 1. The County Tax Agency Fund has been established to account for the county's duties of collecting the county and state property taxes. The levies for the year 20X0 were $600,000 for the County General Fund and $480,000 for the state. It is expected that uncollectible taxes will be $10,000 for the state and $15,000 for the county. 5. Uncollectible taxes in the amount of $5,000 for the state and $6,000 for the county are written off. b. Prepare the GAAP-based Statement of Net Position for the Tax Agency Fund. Assume that the beginning balances of taxes receivable were county, $120,000, and state, $96,000