Question
Hi I'm really struggling with the closing entries for the special revenue fund. Can you please walk me through: Rural County is an agricultural community
Hi I'm really struggling with the closing entries for the special revenue fund. Can you please walk me through:
Rural County is an agricultural community located hundreds of miles from any metropolitan center. The county established a Television Reception Improvement Fund to serve the public interest by constructing and operating television translator stations. TV translator stations serve communities that cannot receive the signals of free over-the-air TV stations because they are too far away from a broadcasting TV station. Because of the large distances between customers, commercial cable TV providers are also not inclined to serve rural communities. The fund charges TV owners a monthly fee of $15. The fund was established on December 20,2016, with a transfer of cash from the general fund of $125,000. On December 31, 2016, the fund acquired land for its translator stations in the amount of $40,000. The remaining cash and the land are the only resources held by the fund at the beginning of 2017.
- Other than beginning account balances, no entries have been made in the general ledger.
- The county prepared a budget for 2017 with estimated customer fees of $32,000, operating costs of $28,000, capital costs of $66,000, and estimated loan proceeds of $55,000.
- The following information was take from the checkbook for the year ended December 31, 2017.
Cash Basis
12 months
Cash receipts:
Fees from customers $33,250
Borrowing from bank 52,000
Total deposits 85,250
Cash disbursements:
Supplies 7,300
Labor 9,900
Utilities 7,500
Equipment 64,000
Interest on bank note 2,080
Total Checks 90,780
Beginning cash balance 85,000
Ending cash balance $79,470
- The loan from the bank is dated April 1 and is for a five year period. Interest (8 percent annual rate) is paid on October 1 and April 1 of each year, beginning October 1, 2017. The county has elected not to establish a debt service fund but will pay the interest on this note from the television Reception improvement fund.
- The machinery was purchased on April 1 with the proceeds provided by the bank loan and has an estimate useful life of 10 years (straight-line basis)
- In January 2018, customers remitted fees totaling $2,100 for December service.
- Supplies of $800 were received on December 29 and paid in January 2018.
- Unused supplies on hand amounted to $760 at December 31, 2017
- Utilities are paid in the following month. The utility bill for December 2017 was received on January 4, 2018 in the amount of $620. (utility bills are recorded through accounts payable)
- On December 21, the company placed an order for a new computerized control switch in the amount of $1500 to be delivered and paid in January 2018.
You have been asked to provide financial statements for the upcoming county board meeting for the Television Reception Improvement Fund.
Part 1: Assume the County chooses to report the Television Reception fund as a special revenue fund following modified accrual basis statements. Using an excel sheet provided:
- Prepare journal entries recording the events above for the year ending December 31,2017.
- Post journal entries to T-Accounts
- Prepare closing entries
- Prepare a Statement of Revenues, Expenditures and Changes in fund Balance
- Prepare a balance sheet assuming there are no restricted or committed fund net resources.
Part 2: Assume the county chooses to report the Television Reception Improvement Fund as an enterprise fund following accrual basis statements. Using an excel template:
- Prepare journal entries recording the events above for the year ending December 31,2017.
- Post journal entries to T-Accounts
- Prepare closing entries
- Prepare a Statement of Revenues, Expenditures and Changes in fund Balance
- Prepare a Statement of Net Position, assuming the bank note is related to capital asset acquisition.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started