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Problem 1 This problem has two parts, part 1a and part 1b. Answer each part separately using the same information. Do not mix answers to 1a and 1b; they are answered separately. Problem 1a: Using the list of transactions below, provide all necessary journal entries for the General Fund only. Write "no entry" if no entry is needed. Problem 1b: Using the same list of transactions, provide all necessary journal entries for the Governmental Activities section in the Government-wide records. Write "no entry" if no entry is needed. Springtown started operations in January, 2021. This information is for the town's first year of legal existence. 1. The Town Council adopted a General fund budget for the year. It included estimated revenues of $4,200,000, estimated other financing sources of $800,000, and appropriations of $4,600,000. 2. The town ordered one pickup truck for the fire department at an anticipated cost of $37,000 and recorded the commitment. 3. Supplies for the town Manag office on account. You purchased for may use either the purchases or the consumption method. 4. Property tax bills were mailed to all property owners. The total assessment is $1,400,000, although officials anticipate that 5% will never be collected. There is a legal claim to this money and the government can use it immediately. 5. A local artist donated a painting for the town Hall valued at $15,000 to be displayed in the Town Hall lobby. The town decided not to capitalize or depreciate this asset. 6. The truck ordered in item (2) above was received at an actual cost of $36,000 to be paid at a later time. The vehicle has an expected life of 6 years and no salvage value. When the town records depreciation, it uses the straight-line method and recognizes a full year of depreciation in the year of purchase. 7. At year-end, $4,000 of the supplies purchased in item (3) were still in the town Manager's office. 8. On January 1, the town's Public Works Department created a landfill on land already owned and used 10% of the capacity in the first year. If closed now, closure costs would be $900,000. The town pays $45,000 of the closure costs each year. 9. Salaries of $52,000 for the Police Department are due one month after the end of the year. 10. At the end of the year, the budget was removed from the town's records. Problem 2 This problem has two parts, part 2a and part 2b. Answer each part separately using the same information. Do not mix answers to 2a and 2b; they are answered separately. Problem 2a: For the fund based records, identify which of the following governmental funds should be used and write the journal entries needed for the listed transactions. You do not need to write any General fund entries for this problem. Capital projects fund Debt service fund Special revenue fund Permanent fund Problem 2b: For the Governmental Activities section of the government-wide records write any necessary journal entries for the following listed transactions. Write "no entry" if no entry is needed. 1. Day City, covered in this problem, issues a $12,000,000 bond at face value. The cash is to be used to remodel City Hall. 2. Previously undesignated cash of $200,000 from the General Fund is set aside to begin paying the bonds issued in item (1). 3. A state cash grant of $300,000 is received that must be spent in the future homeless outreach. The grant proceeds are held until outreach workers are hired and paid. 4. Cash of $400,000 is transferred from the General Fund for the City Hall remondeling construction project. 5. Investments valued at $700,000 are received as a donation from a grateful citizen. Income from the investments is to be used for children's programs. 6. Salaries of $25,000 are paid to homeless outreach workers according to the requirements of the grant received in item 3. 7. The remodeling project is completed and a check is sent to the primary contractor for $12,400,000. No commitment had previously been recorded for the contract. 8. Nothing has yet been recorded this year regarding scheduled payments on the general obligation bonds issued in item (1). A cash payment of $30,000 is made that consists of $5,000 of interest and $25,000 of principal. The interest had not previously been accrued. Problem 3 The following adjusted trial balance is taken from the General Fund of Banner City for the year ended June 30. Prepare a (post-closing) Balance sheet in good form. Allowance for uncollectible taxes 5,000 128,000 Cash Due from capital projects fund 22,000 Due to debt service fund 19,000 Encumbrances 26,000 Encumbrances outstanding 26,000 Expenditures 63,000 Fund Balance, nonspendable 9,000 Fund Balance, unassigned 14,000 Inventory of supplies 9,000 Other financing sources bond proceeds 18,000 Other financing uses -- transfers out 12,000 Revenues 122,000 Taxes receivable 27,000 Unearned (unavailable) grant revenues 45,000 Vouchers payable 29,000 Problem 4. At the beginning of the year, Scenic Valley Health Services, a health and welfare not-for- profit entity, had the following Net Assets balances: Net Assets: Without donor restriction With donor restriction $2,200,000 $760,000 During the year a number of transactions occurred. Using a 2-column schedule, show how each of the following transactions would affect the organization's two categories of Net assets. Show any reclassification necessary. Number each entry on your schedule to match the numbering below and provide a final total. Put your answers in order from 1 to 10. Do not net amounts together. 1. Received cash gifts without donor restriction of $285,000. 2. Paid salaries of $30,000 with $5,000 of that amount coming from restricted funds. 3. Equipment is bought for $105,000 by signing a long-term note for $55,000 and using funds subject to donor restriction for the remainder. 4. Received a contribution without donor restriction of $92,000. It is expected that the entire amount will be collected in three years. Present value is $75,000. 5. Received a cash gift of $14,000 that must be conveyed to another charity. However, the board has the right to choose which other charity ultimately receives the donation. 6. Depreciation of $32,000 on the entity's equipment is recorded. 7. Interest of $50 and principal of $2,000 is paid on the note previously signed when the equipment was purchased. 8. A donor gives an investment worth $190,000 that must be kept invested forever, but any interest or dividends can be used for any legitimate purpose of the entity. 9. Collected membership dues of $25,000. The members receive a reasonable amount of value in exchange for these dues including a monthly newsletter describing research activities. 10. Investment income of $1,800 is generated from the investment received in item (8) above. 2 3 PROBLEM 1(A) 4 NO 5 6 7 8 9 _0 _1 _2 _3 _4 _5 _6 _7 _8 _9 20 21 689 S SENA 22 23 24 25 26 27 28 29 PARTICULARS 1 ESTIMATED REVENUE BUDGETARY FUND BALANCE APPROPRIATIONS ESTIMATED ANOTHER FINANCES 2 ENCUMBRANCES FUND BALANCE RESERVED FOR ENCRUMBANCES 3 ENCUMBRANCES FUND BALANCE RESERVED FOR ENCRUMBANCES 4 TAXES RECEVIABLE ALLOWENCE FOR UNCOLLECTABLE TAXES REVENUES 5 EXPENDITURES DONATION RECEIVED 6 FUND BALANCE RESERVED FOR ENCRUMBANCES ENCUMBRANCES VOUCHERS PAYBLE 6 NO ENTRY DEPRECIATION 7 SUPPLIES EXPENSE SUPPLIES 8 EXPENDITURES CASH 9 EXPENDITURES 6 EXPENDITURES VOUCHERS PAYBLE DEBIT $4,200,000 $320,000 $37,000 $22,000 $1,400,000 $15,000 $37,000 $36,000 $18,000 $45,000 $52,000 0 CREDIT $4,600,000 $80,000 $37,000 $22,000 $70,000 $1,330,000 $15,000 $37,000 $36,000 $18,000 $45,000 $52,000 PROBLEM 1(B) NO PARTICULARS 1 NO ENTRY 2 NO ENTRY 3 ENCUMBRANCES FUND BALANCE RESERVED FOR ENCUMBRANCES 4 TAXES RECEVIABLE ALLOWENCE FOR UNCOLLECTABLE TAXES REVENUES 5 EXPENDITURES DONATION RECEIVED 6 FUND BALANCE RESERVED FOR ENCUMBRANCES ENCUMBRANCES 6 EXPENDITURES VOUCHERS PAYBLE 6 DEPRECIATION EXPENSE ACCUMLATED DEPRECIATION 7 SUPPLIES EXPENSE SUPPLIES 8 EXPENDITURES CASH 9 EXPENDITURES VOUCHERS PAYBLE PARTICULARS To Debt Service funds 3 Cash To Capital project funds 5 Investment To Special Revenue Fund 6 Capital project funds To cash 7 Debt service fund To cash PROBLEM 2(A) NO 1 Cash DEBIT $12,000,000 $100,000 $700,000 $25,000 $12,400,000 DEBIT $22,000 $1,400,000 $15,000 $37,000 $36,000 $6,000 $18,000 $45,000 $52,000 CREDIT $12,000,000 $100,000 $700,000 $25,000 $12,400,000 CREDIT $22,000 $70,000 $1,330,000 $15,000 $37,000 $36,000 $6,000 $18,000 $45,000 $52,000 PROBLEM 2(B) NO PARTICULARS 2 NO ENTRY 4 GENERAL FUND TO DEBT SERVICE FUND 8 GENERAL OBLIGATION FUND INTEREST CASH PROBLEM 3 PARTICULAR CASH TAXES RECEIVABLES ALLOWENCE FOR UNCOLLECTED TAXES DUE FROM CAPITAL PROJECT FUND OTHER FINANCING USES -TRANSFER OUT INVENTORY OF SUPPLIES VOUCHERS PAYBLE UNEARNED GRANT REVENUES DUE TO DEBT SERVICE FUND OTHER FINANCING SOURCES BOND PROCEEDS FUND BALANCE UNASSIGNED FUND BALANCE NON SPENDABLE TOTAL PARTICULARS ENCUMBRANCES OUTSTANDING ENCUMBRANCES REVENUES EXPENDITURE FUND BALANCE ASSIGNED DEBIT $400,000 $25,000 $5,000 DEBIT $128,000 $27,000 $22,000 $12,000 $9,000 $198,000 $26,000 $122,000 DEBIT CREDIT $400,000 $30,000 CREDIT $5,000 $29,000 $45,000 $19,000 $18,000 $73,000 $9,000 $198,000 CREDIT $26,000 $63,000 $59,000 BALANCE SHEET PARTICULARS ASSETS: CASH TAXES RECEIVABLES ALLOWNCE FOR UNCOLLECTABLE TAXES INVENTORY OF SUPPLIES DUE FROM CAPITAL PROJECT FUND OTHER FINANCING USES - TRANSFER OUT TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES VOUCHERS PAYBLE UNEARNED GRANT REVENUE DUE TO DEBT SERVICE FUND OTHER FINANCING SOURCES BOND PROCEEDS TOTAL LIABILITES FUND BALANCES FUND BALANCES ASSIGNED FUND BALANCES NON SPENDABLE TOTAL LIABILTIES AND FUND BALANCES AMOUNT AMOUNT $27,000 ($5,000) $128,000 $22,000 $9,000 $22,000 $12,000 $19,300 $29,000 $45,000 $19,000 $18,000 $111,000 $73,000 $9,000 $193,000 PROBLEM 4 NO PARTICULARS 1 CASH DONOR RESTRICTION TO DONATION WITHOUT RESTRICTION 2 SALARIES DONOR RESTRICTION TO CASH TO RESTRICTED FUNDS 3 EQUIPMENT DONOT RESTRICTION TO LONG TERM NOTE TO FUNDS WITH ASSETS WITH RESTRICTIONS 4 NET ASSETS WITHOUT RESTRICTIONS INTEREST ON CONTRIBUTION TO CONTRIBUTION 5 CASH DONOR RESTRICTION TO DONATION 6 DEPRECIATION DONOR RESTRICTION TO EQUIOPMENT LONG TERM NOTE TO CASH 8 INVESTMENT TO DONATION WITH RESTRICTION 9 CASH TOMEMBERSHIP DUES TO INVESTMENT INCOME 7 INTEREST 10 CASH DEBIT $295,000 $30,000 $105,000 $77,000 $15,000 $14,000 $33,000 $50 $2,000 $180,000 $25,000 $1,300 CREDIT $295,000 $25,000 $5,000 $65,000 $40,000 $92,000 $14,000 $33,000 $2,050 $180,000 $25,000 $1,300 Problem 1a (General fund) No. possible actual points points 1 1.5 2 3 4 5 6 7 8 9 10 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 15 1.0 1.5 2.5 notes You do not put dollar signs in journal entries. You can Google excel number formats to see how to put your numbers in excel correctly. Your journal entries are not in good form. Even if you are using an excel page, you can indent the credited account titles just by hitting the space bar a couple of times. ---- I do not recognize the budget numbers in your entry. They do not correspond to your exam. ==== The numbering of your entries does not correspond to your exam. You show items 1-7 but the exam has items 1-10. Perhaps you did not complete the problem? There is no longer an account called "fund balance reserved for encumbrances" in the current version of the text. The account is called "Encumbrances outstanding." The entry to acquire the supplies on account is not right. I do not recognize the property tax numbers in your entry. They do not correspond to your exam. An entry is needed to remove the encumbrance and record the expenditure for the purchase. An entry would be needed to adjust the supplies inventory amount. The entry is missing. The entry is missing. The entry is missing. Problem score Problem 1b (Government-wide) No. possible actual points points 1 1.5 2 1.5 3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 15 4 5 6 7 8 9 10 0 notes Problem 1 should have been solved in two parts. Problem 1a woudl solve the transactions using the governmental fund and problem 1b would solve the same transactions from the government-wide perspective. It seems that there is no answer to part 1b. Problem score - Problem cannot be scored. Problem 2a (Fund entries) No. possible actual points points 1 1.9 2 1.9 3 1.9 1.9 1.8 1.9 1.9 1.8 15 4 5 6 7 8 0 notes This problem has 8 items. For each item, you were asked to list the correct fund to be used out of the four governmental funds listed in the problem and then you were asked to provide the necessary journal entry. You have not provided the 8 answers needed so this problem cannot be scored. Problem score Problem 2b (Government-wide entries) No. possible actual points points 1 1.9 2 1.9 3 1.9 1.9 1.8 1.9 1.9 1.8 15 4 5 6 7 8 0 notes This problem asked for journal entries for 8 items, so there should be a list of 8 journal entries. You have not numbered any of your entries, so it is unclear which items you are answering. Problem 2b requires journal entries for the governmental activities section of the government-wide records. There are no "funds" in the government-wide records, but all your answers to Problem 2b list "funds" so this problem cannot be scored. Problem score Problem 3 (Balance sheet) Item. possible actual points points notes Cash 1 1 You would not put a dollar sign on every figure in a balance sheet. T/R (net) 2 1 It is not clear that the allowance for uncollectible accounts contra-asset is being shown in the assets section and not the liabilities section of your balance sheet. Due from 1 2 Invent'y 1 1 V/P 1 1 Due to 2 2 Un'd Rev 2 2 balanced 2 1 A balance sheet shows total assets and total liabilities plus fund balances, not total debits and total credits. no temp 2 Temporary accounts such as other financing sources and other financing uses are not shown on the balance sheet. total FB 1 Total fund balance is not right. nonsp 2 assigned 1 unass'd 1 Assigned fund balance is missing. Unassigned fund balance is not right. Problem score 20 2 13 Problem 4 (Schedule of changes to net assets) No. possible actual points points 1 2 2 2 3 2 4 5 6 7 8 9 10 CO NNNNNNNN 2 2 2 2 2 2 2 20 0 notes This problem asked for the change to net assets without donor restriction and net assets with donor restriction using a two-column schedule. It did not ask for the journal entries. This problem cannot be scored because the journal entries do not provide the information needed. Problem score
