Need help journal entries City of Smithville Full Version 16E

General Fund journal entries chapter 4

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Solid Waste Disposal Fund Chapter 7

Tax Agency Fund Chapter 8

Instructions City of Smithville Full Version Computerized Cumulative Problem For use with McGraw-Hill/Irwin Accounting for Governmental & Nonprofit Entities 16th Edition By Jacqueline L. Reck, Suzanne L. Lowensohn, and Earl R. Wilson Table of Contents Chapter 1 Introducing City of Smithville Welcome................................................................ 4 System Requirements.....................................................................4 Licensing....................................................................................5 Running or Removing City of Smithville Running the City of Smithville......................................................5 Removing the City of Smithville....................................................5 General Operating Instructions Opening the City of Smithville..................................................6 Creating a new project...............................................................6 Opening an existing project............................................................7 Saving the current project..........................................................7 City of Smithville Main Window Adding and posting journal entries............................................8 Editing/deleting/unposting journal entries.................................8 Working with the ledgers screen...............................................10 Working with the detail journal screen......................................11 Printing Reports..................................................................................12 Exporting Trial Balances..................................................................13 Completing Chapters 2 through 11 of the City of Smithville Cumulative Problem .................................14 Chapter 2 Opening the Books........................................................15 Chapter 3 Recording the Annual Budget...................................20 Chapter 4 Recording Operating Transactions Affecting the General Fund and Governmental Activities at the Government-wide Level................................................................22 Chapter 5 Recording Capital Asset Transactions...................31 2 Chapter 6 Recording General Long-term Liabilities and Debt Service Transactions............................................................37 Chapter 7 Recording Enterprise Fund and Business-type Activities Transactions.......................................43 Chapter 8 Recording Fiduciary Fund Transactions Tax Agency Fund.............................................................................46 Chapter 9 Adjusting and Closing Entries for Governmental Activities, Government-wide Level; Preparation of Government-wide and Major Fund Financial Statements.......................................................................50 Chapter 10 Analysis of Financial Condition.............................52 Chapter 11 Preparation of Audit Report....................................52 Appendix A............................................................................................53 3 CHAPTER 1 INTRODUCING CITY OF SMITHVILLE Welcome Thank you for purchasing the City of Smithville Government Accounting Software. This software is designed to be used with the McGraw-Hill/Irwin textbook Accounting for Governmental and Nonprofit Entities, 16th edition. Welcome Thank you for purchasing the City of Smithville/City of Bingham Governmental Accounting Software. This software is designed to be used with the McGrawHill/Irwin textbook Accounting for Governmental and Nonprofit Entities, 16th Edition System Requirements To use the City of Smithville/City of Bingham accounting software application, you must have the following: Operating System: Microsoft Windows 2000 or later Mac OS X v10.4 or 10.5 Linux Red Hat Enterprise Linux (RHEL) 5 Hardware: Windows : Intel Pentium II 450MHz or faster processor (or equivalent) Macintosh: PowerPC G3 500MHz or faster processor; Intel Core Duo 1.33GHz or faster processor Recommended screen resolution of 1024 x 768 minimum 128MB of RAM minimum Spreadsheet program (in order to easily view the exported CSV files) Excel 2003 or later (in order to view the exported Excel files) Internet Explorer 7 or later, Mozilla Firefox 3.x or later, Safari 3.x or later Adobe Flash Player version 10.1 or above Adobe Reader 9 or later to read saved report files Special instruction for MAC and Linux users: Users have to manually open the program.html file that resides in the root folder because start instructor is a .exe file and will run only in Windows environment. 4 Licensing This manual for the full version project was written for use with the City of Smithville/City of Bingham software. The manual and the software described in it are copyrighted, with all rights reserved. This manual and the City of Smithville/City of Bingham software may not be copied, except as otherwise provided in your software license or as expressly permitted in writing by McGraw-Hill Higher Education, Inc. Use of the City of Smithville/City of Bingham governmental accounting software (the \"Software\") and its documentation are governed by the terms set forth in your license. Such use is at your sole risk. The software and its documentation (including this manual) are provided \"AS-IS\" and without warranty of any kind. [Note: Read the following instructions on pages 5-12 before beginning your first assignment. Refer back to this information as needed.] RUNNING OR REMOVING THE CITY OF SMITHVILLE Running the City of Smithville The City of Smithville can be run by clicking on the Smithville_Bingham folder as indicated in the \"Opening the City of Smithville\" instructions below. As the City of Smithville is a web-based application, it need not be installed onto your local computer. However, the software is downloaded as a .zip file, copied to your computer or a removable medium (i.e., CD/DVD, USB flash drive, etc.), unzipped, and run locally on your Web browser. As computers are often configured differently, you may need to change your Adobe Flash Player Security settings in order to run the City of Smithville. For more information and detailed instructions, please see Appendix A. You may exit the program by clicking the "X" button at the top right corner of the browser. However, before closing the browser window you MUST SAVE your work or else all changes will be lost. Removing the City of Smithville You can remove the City of Smithville by deleting the \"Smithville_Bingham\" folder. It is unnecessary to uninstall the software. 5 GENERAL OPERATING INSTRUCTIONS Opening the City of Smithville You can open the City of Smithville at any time by clicking on the Smithville_Bingham_Student (or _Instructor) folder and then clicking on either the Program or Start icon. The application requires that the Web Browser pop-up blocker be turned off in order to run the application properly. Creating a New Project If you will need the instructions for Smithville Full Version project before creating a new project, click on the appropriate file on the Launch window or on \"Open Instructions in the opening window. Open or print the project instructions file. To create a new project, click on \"Create New Project.\" The Create New Project window will appear, as shown below. Enter your first and last name, then select City of Smithville as your project and click [Create]. The main project window will pop-up once the project is created and you will be ready to begin entering journal entry data for your first assignment. This step creates the accounts and funds that you will need to complete the full version \"City of Smithville\" project. After you have completed the journal entries for each assignment, you should save your project data file in the Projects folder located in the Smithville_Bingham folder that was created when the download file was unzipped. For your own protection against harddrive failure or file corruption, we recommend that you create a dated backup file on a removable disk (CD/DVD/USB Flash Drive) at the end of each session. This 6 will permit you to reopen your project to the current stage of completion should you make serious errors on the next session. Opening an Existing Project After your initial data entry session, click on \"Open Existing Project,\" and then select and open the data file you saved at the end of your first session. Saving the Current Project During or at the end of each assignment, click on and . If a filename has already been specified, the current filename should be displayed in the Save dialog but may be changed if desired. Be sure NOT to exit your browser until you have saved your project file or all changes made during the current session will be lost. 7 City Of Smithville Main Window If you have opened a project file, the main project window should appear as follows: To navigate between the Journal, Account, and Ledgers screens, simply click on the [TAB] for that particular screen. To switch between different funds and governmental activities, government-wide, choose the desired entity from the drop-down menu. You can verify which entity you are working on by the caption on the upper right corner of the window. It will show the title of your project, and the current fund/entity that is open. The main window has the same standard window controls as most other applications. To close down your project, simply click on the [X] box. It is very important, however, that you save your project file before closing the browser. Remember the folder location where you save your file so it will be easier to retrieve it when you want to reopen the file. 8 Adding and Posting Journal Entries If you are looking at the main window, you need to switch to the Journal view before you can add any journal entries. Once you have switched to the Journal view, you will see the journal entry panel on the lower portion of the window. Before ANY entry can be added to the Journal, a transaction description, account #-description, and debit or credit amount must be specified. Once you have filled in the necessary fields, simply click on [Add Entry] to add the entry to the journal. If the entry being made is a closing entry, you must click on the check mark for [Closing Entry]. If one of the fields is missing a value or contains an illegal character, the [Add Entry] button will remain disabled. If you are adding an entry that also affects a detail journal, you must first select an item from the drop-down [Transaction Description] or type your own description in the box before selecting the account and select the corresponding control account from the drop-down [Account (# - Account Description)] menu. If the account selected is a control account, the detail journal will automatically open for entering the transaction detail. Once you have entered a batch of entries into the general journal, you can post them to the general ledger at any time by clicking the [Post Entries] button. In the case of the General Fund, posting transactions also posts entries from the detail journal to the Revenue ledger and Appropriations, Encumbrances, Expenditures ledgers. The [Post Entries] button only posts entries for the fund/entity that is currently open. Editing/Deleting/Unposting Journal Entries To edit entries that have already been entered, double click or right click on the entry, and select edit. You will know you are in edit mode when the entry form turns red and the boxes fill in with the data from the journal. If you wish to delete an entry, right click on the item and select [Delete] or choose [Edit]-[Delete]. 9 As in real-world systems, the software usually does not allow you to edit entries that have already been posted. So, it is recommended that you verify the accuracy of entries before clicking [Post Entries]. However, for your convenience we have added the capability to \"unpost\" individual batches of posted transactions. Simply highlight any entry within the batch you want to unpost and either right click and select [Unpost] or select [Unpost] from the Edit menu. Make all necessary editing changes, then click [Post Entries] and your corrections will be made to the appropriate accounts. If you need to add a missing entry to a previously posted journal entry, then unpost as described above, highlight the line below which a new entry is to be added, and right click and select \"Insert New Entry.\" Screen shot of \"right clicking\" on a journal entry. Enter the data for the new entry and click \"Add Entry\" to insert the new entry. As in prior versions, a provision also allows you to clear all of the transactions from the current fund or entity. Under [File]-[Student Assistance] you will find the option [Wipe out Current Fund or Entity]. The wipe out function should be used as a last resort since making changes by editing is quite easy. Once you select this option, there is no going back. It will remove ALL of the transactions for the current fund or entity. Working with the Ledgers Screen Switch to the Ledgers screen by clicking on the ledgers tab. The screen is shown on the following page. 10 Switch entities at any time by changing the selection. Depending on the fund or entity with which you are working, there may be different ledgers for you to view. Choose the ledger you want to view from the drop-down list. If you want to print out a ledger, you should open the [Reports] menu, and select the report to print. Working with the Detail Journal Screen The General Fund of the City of Smithville uses a Detail Journal to avoid recording operating or budget detail in the general journal/ledgers. If you choose an control account that has subsidiary detail associated with it, you will be taken directly to the Detail Journal. If you attempt to edit a journal entry that has associated subsidiary detail, you will automatically be prompted to also open the Detail Journal for editing, if desired. The Detail Journal screen for the General Fund appears as shown on the following page. 11 The Detail Journal operates very similar to the entry screen on the General Journal. Fill in the boxes or, in the case of the [Transaction Description] box, select a description from the drop-down menu, and click [Add Entry]. The balance of the entries for this transaction is automatically updated. When you exit the Detail Journal the balance will be copied into a single control account amount in the General Journal. Please note that the year and reference numbers of these transactions are based on the originating entry (the line in the General Journal). Printing Reports All of the reports for the City of Smithville are available through the Reports menu. Simply go to the menu and click on the report you want. To print, click on the \"Print\" icon and print in the normal manner. If you need to create a \"Save as Printable PDF File,\" accept the default file name and save location, or change the name and/or location if you prefer. 12 Exporting Trial Balances To make it easier to prepare financial statements/schedules, spreadsheet files for all trial balances for each entity and each year of transactions, as well as detail subsidiary account balances (General Fund only), can be exported to either Excel or CVS for non-Microsoft applications. To export an item, select it from the menu, accept the default file name and folder location, and save it. You can change the file name and/or location if you prefer. 13 Completing Chapters 2 through 11 of the City of Smithville Full Version Foreword This full version of a cumulative problem written for the computer presents a series of transactions covering activities for the City of Smithville, assuming the city utilizes the dual-track accounting approach to the GASB reporting model described in Reck, Lowensohn, and Wilson, Accounting for Governmental and Nonprofit Entities, 16th edition. The transactions presented relate to the city's General Fund, capital projects, debt service, enterprise, and fiduciary funds, as well as to an additional accounting entity, governmental activities at the government-wide level. The transactions and instructions in this series are designated Chapter 2, Chapter 3, etc., corresponding to the chapters of Reck, Lowensohn, and Wilson, Accounting for Governmental and Nonprofit Entities, 16th edition. You should begin the project with Chapter 2 of the instructions as you complete Chapter 2 of the textbook. Some problems require you to print trial balances or other documents. Other problems require the preparation of financial statements or other documents. The specified documents can either be turned in chapter by chapter or retained in a cumulative folder until the end of the project, depending on your instructor's preference and instructions. Some instructors may prefer that you attach your project data file and either Excel or PDF files containing your trial balances, financial statements, and other documents to an e-mail for submission, rather than submitting printed copies. To minimize errors, you should read and follow all instructions carefully. Students find that this computerized cumulative problem significantly enhances their learning if they complete each City of Smithville chapter as the corresponding chapter of the textbook is covered. Conversely, students who procrastinate often find that the project takes much more time than they expected and that it is harder to recall how to make the journal entries covered in the earlier chapters. Thus, delaying until your project is nearly due may increase the total time it takes you to do the project and leave you little time for anything else that week. So, our advice is to stay current with the project. 14 Chapter 2 Opening the Books The City of Smithville has just implemented a new dual-track computerized accounting system, which provides files for general journal entries and posting to appropriate general ledger/subsidiary ledger accounts. Budgetary, operating statement, and balance sheet accounts are provided for the General Fund and the other governmental fund types. Operating statement accounts and balance sheet accounts are also provided for governmental activities at the government-wide level and the proprietary and fiduciary funds used by the City of Smithville that you will use in Chapters 5-9 of the problem. As the city's new accountant (lucky you!), it is your job to enter the city's initial accounting information as of December 31, 2013, and to prepare to place the new accounting system in full operation effective January 1, 2014. Required Open the City of Smithville software by double clicking on the Smithville_Bingham folder and then clicking on either the Program or Start icon. When the Launch Application Page appears, select \"Launch Application.\" If creating a new project, click [Create New Project], when the [Create New Project] window appears choose City of Smithville from the [Choose a City] drop down menu. In addition, in the [Enter your name] box please type in your first and last name so that your name will appear on all printable reports and click [Create]. This will create the project and provide access to all of the funds and accounts that you will need to complete the \"City of Smithville\" cumulative problem. To protect yourself from possible hard drive failure or corruption of your project data file, we recommended that you save your file to a removable storage device (e.g., flash drive), creating a dated backup file for your project at the end of each session. To open an existing project, click on [Open Existing Project] in the opening window. a. If it is not already displayed, select [General Fund] in the [Current Accounting Entity] window and the [Accounts] tab. Verify that the following accounts are listed. (Note: In addition to the accounts listed below you will see detail accounts that will be used in subsequent chapters for achieving budgetary control and recording revenues and expenditures detail.) Select the [Journal] tab and click the drop down menu for [Account (# - Description)]. You should see all of the following general ledger accounts listed (Note: For purposes of this exercise, date suffixes are omitted from the Expenditures and Encumbrances accounts as expenditures from two year's appropriations do not occur in this problem.). Cash Taxes ReceivableCurrent Estimated Uncollectible Current Taxes Taxes ReceivableDelinquent Estimated Uncollectible Delinquent Taxes 15 Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Due from Other Funds Due from State Government Interfund Loans ReceivableCurrent Inventory of Supplies Vouchers Payable Tax Anticipation Notes Payable Due to Other Funds Due to Federal Government Due to State Government Interfund Loans PayableCurrent Fund BalanceNonspendableInventory of Supplies Fund BalanceRestrictedGeneral Government Fund BalanceRestrictedPublic Safety Fund BalanceRestrictedPublic Works Fund BalanceRestrictedHealth and Welfare Fund BalanceRestrictedCulture and Recreation Fund BalanceCommittedGeneral Government Fund BalanceCommittedPublic Safety Fund BalanceCommittedPublic Works Fund BalanceCommittedHealth and Welfare Fund BalanceCommittedCulture and Recreation Fund BalanceAssignedGeneral Government Fund BalanceAssignedPublic Safety Fund BalanceAssignedPublic Works Fund BalanceAssignedHealth and Welfare Fund BalanceAssignedCulture and Recreation Fund BalanceUnassigned Budgetary Fund Balance Encumbrances Outstanding Estimated Revenues Revenues Appropriations Expenditures Encumbrances b. The trial balance for the General Fund of the City of Smithville as of December 31, 2013, is shown on the following page. Select the [Journal] tab and create a journal entry to enter the balance sheet accounts and amounts shown in the trial balance (review software operating procedures in Chapter 1 of these instructions if necessary). Be sure to enter 2013 from the [Year] menu and enter the paragraph number from these instructions in the [Transaction Description] box of the [Journal]. For this entry you should enter 2-b. Select the appropriate accounts individually and insert the appropriate amounts. (Note: Enter all dollar amounts without dollar signs and without commas. All amounts in this project should be 16 rounded to the nearest whole dollar. For all entries, it is vitally important that the correct year be selected.) You must enter each account and amount one line at a time by clicking [Add Entry]. The year and transaction description need only be entered for the first line of the journal entry; it will remain selected for the rest of the accounts. When you have completed entering all account data and amounts, verify your entries, including date and paragraph numbers. When you are sure that your entries are correct, click [Post Entries] to post the items to the general ledger of the General Fund. Unpost capability. As discussed in Chapter 1 of these instructions, the City of Smithville software program permits students to \"unpost\" a particular batch of posted transactions. Unposted entries then can be edited or missing entries can be inserted before re-posting entries. Select [Reports, Trial Balances, Post-Closing Trial Balance] and print the postclosing trial balance for year 2013. Retain the printed trial balance in your personal cumulative folder until the due date assigned by your instructor for the project, or submit the trial balance by e-mail if directed to do so by your instructor. In the latter case you will need to save a PDF print file for later submission. CITY OF SMITHVILLE General Fund Post-Closing Trial Balance As of December 31, 2013 Account Title Debits Cash $ 281,410 Taxes ReceivableDelinquent 618,706 Estimated Uncollectible Delinquent Taxes Interest and Penalties Receivable on Taxes 69,380 Estimated Uncollectible Interest and Penalties Due from State Government 500,000 Inventory of Supplies 60,000 Vouchers Payable Tax Anticipation Notes Payable Due to Federal Government Due to State Government Fund BalanceNonspendable Inventory of Supplies Fund BalanceCommittedPublic Works Fund BalanceAssignedCulture and Recreation Credits $ 36,890 18,226 482,844 375,000 148,600 27,300 60,000 72,600 54,850 17 Fund BalanceUnassigned Totals $1,529,496 253,186 $1,529,496 c. Select [Governmental Activities, Government-wide Level] in the [Current Accounting Entity] drop-down box and the [Accounts] tab. You will see most of the accounts included in the preceding trial balance, plus many other accounts that will be used in the various chapters of the City of Smithville project. d. Select the [Journal] tab and create a journal entry to enter the statement of net position, i.e., balance sheet) accounts and amounts shown in the following trial balance. It is necessary to enter these items in the accounts of the governmental activities category at the government-wide level as the general journal and general ledger for governmental activities comprise a separate \"set of books\" from those for the General Fund. Be sure to enter 2013 from the drop-down date menu and enter 2d in the Transaction Description box. Select each account individually and insert the appropriate debit or credit amount for each account. When you have completed entering the initial data, verify its accuracy and click [Post Entries] to post the entry to the governmental activities, government-wide general ledger. Select [Reports, Trial Balances, Post-Closing Trial Balance] and print the trial balance for 2013. You should also save the report file as a .pdf file. Retain in your cumulative file until the due date for your project or the time specified by your instructor. Alternatively, submit the saved trial balance file by e-mail if directed to do so by your instructor. Before closing the City of Smithville, click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. CITY OF SMITHVILLE Governmental Activities Government-wide Level Post-Closing Trial Balance As of December 31, 2013 General Ledger Account Title Debits Credits Cash $ 281,410 Taxes ReceivableDelinquent 618,706 Estimated Uncollectible Delinquent Taxes $ 36,890 Interest and Penalties Receivable on Taxes 69,380 Estimated Uncollectible Interest and Penalties Due from State Government Inventory of Supplies 18,226 500,000 60,000 18 Land Infrastructure Accumulated DepreciationInfrastructure Buildings Accumulated DepreciationBuildings Equipment Accumulated DepreciationEquipment Vouchers Payable Tax Anticipation Notes Payable Due to Federal Government Due to State Government Net PositionNet Investment in Capital Assets Net PositionUnrestricted Totals 4,180,000 9,862,000 2,595,600 6,296,000 1,583,000 3,529,000 $25,396,496 1,342,000 482,844 375,000 148,600 27,300 18,346,400 440,636 $25,396,496 19 Chapter 3 Recording the Annual Budget The following budget for the General Fund of the City of Smithville was legally adopted for the fiscal year ending December 31, 2014. Estimated Revenues: Taxes: Real Property Sales Interest and Penalties on Taxes Licenses and Permits Fines and Forfeits Intergovernmental Revenue Charges for Services Miscellaneous Revenues Total Estimated Revenues $1,646,000 1,885,000 7,000 588,000 420,000 325,000 230,000 80,000 $5,181,000 Appropriations: General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Total Appropriations $ 618,600 2,453,300 920,600 620,200 482,400 50,000 $5,145,100 Required a. After opening the data file you created for Chapter 2 of this project, record the budget in the general journal, providing entries in the Detail Journal when directed. Begin by selecting [General Fund] in the [Current Accounting Entity] drop-down box and the [Journal] tab. In the [Year] box, be sure to select the year 2014. Enter 3-a in the [Transaction Description] box. Select \"Estimated Revenues\" in the drop down [Account (# - Description)] window. This will take you automatically to the Detail Journal where you will enter the detail for each estimated revenue source. In the Detail Journal, select \"Budget Authorization\" from the drop-down menu for [Transaction Description]. When you have finished entering the estimated revenue detail information, verify that the correct total amount is shown in the Detail Journal, then click on [Return to General Journal] and the total estimated revenues will be entered in the general journal Estimated Revenues control account. Follow the same procedure to record the budget detail for Appropriations. Complete the general journal entry by debiting or crediting Budgetary Fund Balance as appropriate to make the journal entry balance. Note that budgetary entries have no effect on governmental activities at the 20 government-wide level and thus the budget information is only recorded in the General Fund. When you are satisfied you have made the entry correctly, post it to the general ledger by clicking on [Post Entries]. Before posting, or after unposting as described previously, you can edit any of your journal entries by placing the cursor in the line you want to edit, then right-clicking and selecting \"Edit.\" After unposting, any entry can be edited or deleted and any omitted entry can be inserted above any highlighted entry. b. Go to [Reports], print the pre-closing subsidiary ledgers and pre-closing trial balance for year 2014 from the \"Reports\" window for retention in your cumulative file until directed by your instructor to submit them, or submit saved versions of these documents by e-mail if directed to do so by your instructor. As of this time, only the budget has been recorded. (Note: To ensure that your saved files are not erased when year-end trial balances or subsidiary ledger account balances are saved in Chapter 4, you should add \"_after Ch3\" to your saved file names. This is your last opportunity to print or export these documents with budget information only. After operating transactions have been journalized and posted in Chapter 4, subsidiary ledgers and trial balances will contain both budgetary and operating accounts and balances.) Before closing the City of Smithville, click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 21 Chapter 4 Recording Operating Transactions Affecting the General Fund and Governmental Activities at the Government-wide Level Presented below are a number of transactions for the City of Smithville that occurred during the fiscal year for which the budget given in Chapter 3 was recorded, the calendar year 2014. Read all instructions carefully. a. After opening the data file containing your data from Chapters 2 and 3 of this project, record the following transactions in the general journal for the General Fund and, if applicable, in the general journal for governmental activities at the government-wide level. For all entries, the date selected should be year 2014. For each of the paragraphs that requires entries in both the General Fund and governmental activities journals, you can either record them in both journals on a paragraph-by-paragraph basis or, alternatively, record all the General Fund journal entries first for all paragraphs, then complete the governmental activities journal entries for all paragraphs next. If you choose the latter method, it might be useful to print the General Fund general journal entries from the Reports menu to assist in making the entries in the governmental activities journal. Regardless of the method you choose, we recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck, Lowensohn, and Wilson textbook (16h edition) for guidance in making all entries. For each entry affecting budgetary accounts or operating statement accounts, the Detail Journal will automatically open, as was the case in Chapter 3, to record the appropriate amounts in the detail budgetary or actual accounts. Please remember that before closing the City of Smithville, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 1. [Para. 4-a-1] On January 2, 2014, real property taxes were levied for the year in the amount of $1,697,000. It was estimated that 3 percent of the levy would be uncollectible. Required: Record this transaction in both the General Fund and governmental activities journal. (Note: Type 4-a-1 as the paragraph number in the [Transaction Description] box for this entry; 4-a-2 for the next transaction, etc. Careful referencing by paragraph number is very helpful should you need to determine where you may have omitted a required journal entry or made an error.) (Select \"Accrued Revenue\" in the drop down [Transaction Description] menu in the Detail Journal related to the General Fund entry.) 2. [Para. 4-a-2] Encumbrances were recorded in the following amounts for purchase orders issued against the appropriations indicated: 22 General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Total $ 98,453 185,259 247,675 173,469 108,927 41,563 $855,346 Required: Record the encumbrances in the General Fund general journal and Detail Journal as appropriate. In the Detail Journal, select \"Purchase Orders\" from the drop down [Transaction Description] menu. You can also type in an alternative description, if desired. 3. [Para. 4-a-3] Cash was received during the year in the total amount of $5,821,280 for collections from the following receivables and cash revenues, as indicated: Current Property Taxes Delinquent Property Taxes Interest and Penalties Receivable on Taxes Due from State Government Revenues: (total: $3,380,210) Sales Taxes Licenses and Permits Fines and Forfeits Intergovernmental Charges for Services Miscellaneous Total $1,546,800 360,000 34,270 500,000 1,886,860 583,800 423,360 168,000 225,070 93,120 $5,821,280 Required: Record the receipt of cash and the related credits to receivables and revenues accounts, as applicable, in both the General Fund and governmental activities journals. (Select \"Received in Cash\" in the drop down [Transaction Description] menu in the Detail Journal related to the General Fund revenue entries.) For purposes of the governmental activities entries at the government-wide level assume the following classifications: General Fund Sales Taxes Licenses and Permits Fines and Forfeits Governmental Activities General RevenuesTaxesSales Program RevenuesGeneral Government Charges for Services Program RevenuesGeneral Government Charges for Services 23 Intergovernmental Charges for Services Miscellaneous Program RevenuesPublic SafetyOperating Grants and Contributions Program RevenuesGeneral Government Charges for Services, $140,100 Program RevenuesCulture and Recreation Charges for Services, $84,970 General RevenuesMiscellaneous 4. [Para. 4-a-4] Additional interest and penalties were accrued on delinquent property taxes in the amount of $2,836, of which 10 percent was estimated to be uncollectible. (Note: Round the estimated uncollectible to the nearest whole dollar.) Required: Record this accrual in both the General Fund and governmental activities general journals. 5. [Para. 4-a-5] General Fund payrolls for the year totaled $3,822,600. Of that amount, $472,040 was withheld for employees' federal income taxes; $291,740 for employees' share of FICA taxes; $171,610 for employees' state income taxes; and the remaining $2,887,210 was paid to employees in cash. The City of Smithville does not record encumbrances for payrolls. The payrolls were chargeable against the following functions' appropriations: General Government Public Safety Public Works Health and Welfare Culture and Recreation Total $ 476,376 2,013,110 612,881 397,673 322,560 $3,822,600 Required: Make summary journal entries for payroll in both the General Fund and governmental activities general journals for the year. 6. [Para. 4-a-6] The city's share of FICA taxes, $291,740, and the city's contribution of $195,380 to retirement funds administered by the state government were recorded as liabilities. Required: Record this transaction in both the General Fund and governmental activities general journals. Assume that the total $487,120 should be allocated in the same proportions as in paragraph 4-a-5 above; that is: General Government: ($476,376/$3,822,600) x $487,120 = $60,705 Public Safety: ($2,013,110/$3,822,600) x $487,120 = $256,534 Public Works: ($612,881/$3,822,600) x $487,120 = $78,101 Health and Welfare: ($397,673/$3,822,600) x $487,120 = $50,676 Culture and Recreation: ($322,560/$3,822,600) x $487,120 = $41,104 24 (Note: The allocated amount for Public Works was rounded up one dollar to compensate for rounding error.) 7. [Para. 4-a-7] Invoices for some of the goods recorded as encumbrances in transaction 4-a-2 were received and vouchered for later payment, as listed below. Related encumbrances were canceled in the amounts shown (Select \"Elimination\" in the drop down [Transaction Description] menu in the Detail Journal): General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Expenditures $ 93,838 173,669 190,596 176,400 109,280 41,160 $784,943 Encumbrances $ 94,752 173,356 190,512 173,124 108,927 41,563 $782,234 Required: Record the receipt of these goods and the related vouchers payable in both the General Fund and governmental activities journals. At the governmentwide level, you should assume the city uses the periodic inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except that $27,800 of the amount charged to the Public Works function was for a vehicle (debit Equipment for this item at the government-wide level). Expenditures charged to the miscellaneous appropriation should be recorded in this case as General Government expenses at the government-wide level. 8. [Para. 4-a-8] During FY 2014, the City of Smithville received notification that the state government would remit $165,000 to it early in the next fiscal year, although this amount is intended to finance certain public safety operations of the current year. This amount had been anticipated and was included in the budget for the current year as "Intergovernmental Revenue.\" Required: Record this transaction as a receivable and revenue in the General Fund and governmental activities journals. (Note: Select \"Accrued Revenue\" in the [Transaction Description] box in the Detail Journal). At the governmentwide level, assume that this item is an operating grant to the Public Safety function. 9. [Para. 4-a-9] Checks were written in the total amount of $2,809,090 during 2014. These checks were in payment of the following items: Vouchers Payable Tax Anticipation Notes Payable Expenditures (Interest on tax anticipation notes) Due to Federal Government $ 995,600 375,000 (see Chapter 2) 8,400 1,068,400 25 Due to State Government Total amount paid 361,690 $2,809,090 (Note: Interest expenditures on tax anticipation notes were budgeted in the Miscellaneous category. Record them as a General Government expense at the government-wide level.) Required: Record the payment of these items in both the General Fund and governmental activities general journals. 10. [Para. 4-a-10] Current taxes receivable uncollected at year-end, and the related Estimated Uncollectible Current Taxes account, were both reclassified as delinquent. Required: Record these reclassifications in the General Fund and governmental activities journals. 11. [Para. 4-a-11] The city's budget for 2014 was legally amended as follows: Estimated Revenues: Licenses and permits Intergovernmental Charges for Services Miscellaneous Total Appropriations: General Government Public Safety Public Works Health and Welfare Culture and Recreation Decreases $ 5,000 Increases $ 5,000 5,000 $10,000 10,000 $15,000 $22,000 3,500 15,000 5,500 $8,000 $8,000 $46,000 Note: These amendments decrease the balance of the Budgetary Fund Balance account by $33,000. Required: Record the budget amendments in the General Fund general journal only. Budgetary items do not affect the government-wide accounting records. (Note: Select \"Budget Amendment\" in the [Transaction Description] box in the Detail Journal.) 12. [Para. 4-a-12] Interest and penalties receivable on delinquent taxes was increased by $11,000; $3,500 of this was estimated as uncollectible. 26 Required: Record this transaction in the General Fund and governmental activities journals. 13. [Para. 4-a-13] Services received by the General Government function of the General Fund from the Solid Waste Disposal Fund amounted to $16,500 during the year. Of this amount, $10,100 was paid in cash and $6,400 remained unpaid at year-end. Required: Record the receipt of these services, amounts paid during the year, and remaining liability in the General Fund and governmental activities journals. At the government-wide level the liability should be credited to Internal Payables to Business-type Activities. Do not record these items in the Solid Waste Disposal Fund until instructed to do so in Chapter 7 of this case. 14. [Para. 4-a-14] Delinquent taxes receivable in the amount of $17,150 were written off as uncollectible. Interest and penalties already recorded as receivable on these taxes, amounting to $8,820, were also written off. Additional interest on these taxes that had legally accrued was not recorded since it was deemed uncollectible in its entirety. Required: Record this transaction in the General Fund and governmental activities journals. 15. [Para. 4-a-15] It was discovered that goods in the amount of $12,000 had been recorded in error as an expenditure against the General Government appropriation of the General Fund. These goods should have been charged to the Solid Waste Disposal Fund, an enterprise fund and a business-type activity at the governmentwide level. This item had also been charged as an expense of the General Government function at the government-wide level. An interfund invoice was prepared to reduce expenditures of the General Fund for the $12,000 and recognize an interfund receivable. This item will be recognized later in Chapter 7 of this case as an expense of the Solid Waste Disposal Fund. Required: Record this reimbursement transaction in the General Fund and governmental activities journals, debiting Due from Other Funds in the General Fund and Internal Receivables from Business-type Activities at the governmentwide level. Do not make any entries in the Solid Waste Disposal Fund at this time. (Note: Select \"Goods Received\" in the [Transaction Description] box in the Detail Journal). 16. [4-a-16] In December 2014, the General Fund made a short-term loan of $20,000 to the Street Improvement Bond Debt Service Fund to assist with payment of an interest payment due on January 1, 2015. 27 Required: Record this transaction in the General Fund only. The transaction has no effect at the government-wide level since it occurs between two governmental activities. 17. [4-a-17] Adjusting Entry. A physical count of consumable supplies at year-end showed an ending balance of $66,000, an increase of $6,000 during the year. The city uses the purchases method of accounting for its inventory in the General Fund and the consumption method at the government-wide level. Since the city uses a periodic inventory system, both at the fund and governmental levels, it records all purchases of inventory as expenditures in the General Fund and as expenses at the government-wide level. These were included as part of the amounts recorded in paragraph 4-a-7. Adjustments to the expenses accounts should be made to the Public Works function, where most supplies are used. Required: Prepare the adjusting journal entries in the General Fund journal to adjust the Inventory of Supplies and Fund BalanceNonspendableInventory of Supplies accounts to the correct balances and the governmental activities journal to adjust the ExpensesPublic Works and Inventory of Supplies accounts. Post all journal entries to the general and subsidiary ledgers: After reviewing all entries for accuracy, including year and paragraph numbers, post all entries to the general ledger accounts and to all subsidiary ledger accounts, by clicking on [Post Entries]. Also post all entries in the governmental activities journal. 18. Closing Entry. Following the instructions in the next paragraph, prepare and post the necessary entries to close the Estimated Revenues and Appropriations accounts to Budgetary Fund Balance, and Revenues and Expenditures to Fund BalanceUnassigned. Because the City of Smithville honors all outstanding encumbrances at year-end, it is not necessary to close Encumbrances to Encumbrances Outstanding at year-end since encumbrances do not affect the General Fund balance sheet or statement of revenues, expenditures, and changes in fund balances. If, however, you would like to avoid having these accounts appear in the post-closing trial balance, you can opt to close Encumbrances to Encumbrances Outstanding. If the accounts are closed, they would need to be reestablished at the beginning of the next year, although entries are not required in this problem for the next year. To close the temporary accounts, you must click on the check mark for [Closing Entry], \"Closing Entry\" will appear in the [Transaction Description] box. Be sure the check mark in the box for [Closing Entry] is showing before closing each individual account. Also, you will be sent to the Detail Journal where you must close each individual budgetary or operating statement account. To determine the closing amounts for both General Ledger and subsidiary ledger accounts, you should first print the pre-closing version of these ledgers for year 2014 from the [Reports] menu. 28 At year-end, an analysis by the city's finance department determined the following constraints on resources in the General Fund. Prepare the appropriate journal entry in the General Fund to reclassify amounts between Fund Balance Unassigned and the fund balance accounts corresponding to the constraints shown below. (Note: You should consider the beginning of year balances in fund balance accounts in calculating the amounts to be reclassified.) Account Fund BalanceRestricted Public Safety Fund BalanceCommitted Public Works Fund BalanceAssigned Culture and Recreation Amount $15,000 29,700 56,800 Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL ACTIVITIES AT THIS TIME since governmental activities will not be closed until Chapter 9, after the capital projects fund (Chapter 5) and debt service fund (Chapter 6) transactions affecting governmental activities at the government-wide level have been recorded. b. Select \"Export\" from the drop down [File] menu to create an Excel worksheet of the General Fund post-closing trial balance as of December 31, 2014. Use Excel to prepare in good form a balance sheet for the General Fund as of December 31, 2014. Follow the format shown in Illustration 4-3 of Reck, Lowensohn, and Wilson, Accounting for Governmental and Nonprofit Entities, 16th edition textbook (hereafter referred to as \"the textbook\"). Alternatively, you can click on [Reports] to print the post-closing trial balance and use the printed copy to manually prepare a balance sheet. c. Select \"Export\" from the drop down [File] menu to create an Excel worksheet of the General Fund pre-closing subsidiary ledger account balances for the year 2014. Use Excel to prepare in good form a statement of revenues, expenditures, and changes in fund balance for the General Fund for the year ended December 31, 2014. (See Illustration 4-4 in the textbook for an example format.) d. Use the Excel worksheet of the General Fund pre-closing subsidiary ledger account balances created in part c above to prepare in good form a schedule of revenues, expenditures, and changes in fund balancebudget and actual for the General Fund for the year ended December 31, 2014. (See Illustration 4-5 in the textbook for an example format.) e. Prepare a reconciliation of total expenditures reported in your solution to part c of this problem with the total expenditures and encumbrances reported in your solution to 29 part d of this problem. (In Chapter 4 below Illustration 4-5, see discussion and example which compares Illustrations 4-4 and 4-5.) [Note: File the printouts of all your exported or printed documents and your completed financial statements in your cumulative problem folder until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail.] Before closing the City of Smithville, click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 30 Chapter 5 Recording Capital Asset Transactions Street Improvement Capital Projects Fund and Governmental Activities at the Government-wide Level During late 2013, the voters of the City of Smithville authorized tax-supported bond issues totaling $10,000,000 as partial financing for a series of projects to construct streets, curbs, culverts, and storm sewers in various parts of the city. The estimated total cost of the series of projects, which are expected to extend over the next three years, was $11,200,000. In addition to the bond financing, voters also approved a special cent sales tax to assist in financing the projects. The sales tax begins January 1, 2014 and will continue for three years. The sales tax is projected to generate $400,000 each year. Required a. Open a general journal for the Street Improvement Fund by recording the transactions listed under paragraph b below, as necessary. Use account titles listed under the dropdown [Account (# - Description)] menu. Select 2014 for each transaction in the [Year] box of the [Journal] view. Enter the paragraph reference, i.e. 5-b-[1, 2, 3, etc], in the [Transaction Description] box. The following account titles should appear in the [Accounts] view: Cash Investments Taxes ReceivableSales Interest Receivable on Investments Vouchers Payable Judgments Payable Contracts Payable Contracts PayableRetained Percentage Fund BalanceRestricted Encumbrances OutstandingElm Street Project Encumbrances OutstandingSpruce Street Project Revenues Other Financing SourcesProceeds of Bonds Construction ExpendituresElm Street Project Construction ExpendituresSpruce Street Project Interest ExpendituresSpruce Street Project Other Financing UsesInterfund Transfers Out EncumbrancesElm Street Project EncumbrancesSpruce Street Project Please remember that before closing the City of Smithville, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 31 b. Record journal entries in the general journal of the Street Improvement Fund, as appropriate, for each of the following transactions. Remember to enter the correct year and paragraph numbers. Do not record entries at this time in other affected funds; those entries will be made in the later chapters of this cumulative problem that cover the affected funds. You should, however, make all required entries in the governmental activities general journal at the government-wide level. 1. [Para. 5-b-1] In early 2014, design plans and specifications for the first project, the \"Elm Street Project,\" were submitted by a construction engineering firm. The firm billed the Street Improvement Fund for $40,000. Required: Record this billing and the related Vouchers Payable liability in the Street Improvement Fund and governmental activities journals. (Note: this transaction was not encumbered.) 2. [Para. 5-b-2] On March 1, 2014, the city signed a $50,000, 90-day tax anticipation note bearing interest of 3 percent per annum. Required: Record this transaction in the Street Improvement Fund and governmental activities journals. 3. [Para. 5-b-3] A $290 purchase order for advertisements soliciting bids for the Elm Street Project was issued during March 2014. The bill for advertising in the amount of $300 was received and a voucher for payment was issued. Required: Record the encumbrance, billing, and the Vouchers Payable liability in the Street Improvement Fund and governmental activities journals, as appropriate. 4. [Para. 5-b-4] Sales tax revenue of $105,000 was received from the state government and recorded for the first quarter of 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 5. [Para. 5-b-5] Vouchers payable accumulated to date were paid on April 10, 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 6. [Para. 5-b-6] On April 15, 2014, construction bids were opened and analyzed. A bid of $2,000,000 was accepted, and the contract was awarded for the Elm Street Project. The contract provided for a retained percentage of 4 percent from each progress payment, and from the final payment, until final inspection and acceptance by the city's public works inspectors. 32 Required: Record the signing of the contract in the Street Improvement Fund general journal. This transaction has no effect at the government-wide level. 7. [Para. 5-b-7] On May 6, 2014, 4% deferred serial bonds with a face value of $2,000,000 were sold for a total amount of $2,068,000, of which $28,000 was for accrued interest from the January 1, 2014, date of the bonds and $40,000 was a premium on the bonds sold. Cash in the amount of the accrued interest and premium was deposited directly in the Street Improvement Bond Debt Service Fund. Cash in the amount of $2,000,000 was deposited and recorded in the Street Improvement Fund. The city invested $1,000,000 of the bond proceeds in certificates of deposit maturing in six months and earning 3% per annum. Required: Record these transactions in the Street Improvement Fund and governmental activities journals. (Hint: In addition to recording the liability for bonds payable in the governmental activities journal, you should record the premium on the bonds payable [credit Premium on 4% Deferred Serial Bonds] and accrued interest on bonds sold [we recommend that you credit Expense Interest on Long-term Debt] in the governmental activities general journal for the $28,000 of accrued interest.) For now you should ignore the entries in the Street Improvement Bond Debt Service Fund to record the accrued interest and premium. Those entries will be made in Chapter 6 of this cumulative problem. 8. [Para. 5-b-8] The city repaid the $50,000 tax anticipation note plus interest of $375 ($50,000 X .03 X 90/360) (See transaction 2). Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. The $375 of interest should be debited to Interest Expenditures in the Street Improvement Fund journal and to Expenses General Government in the governmental activities journal. 9. [Para. 5-b-9] In July 2014, the contractor for the Elm Street Project reported that the project was one-half completed and requested a progress payment of $1,000,000. This amount was paid in late July, less the contractual retention of 4 percent. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 10. [Para. 5-b-10] Construction engineers engaged by the city submitted design plans and specifications for the second street improvement project, the \"Spruce Street Project.\" Vouchers were approved in the amount of $30,000 in payment for the engineering services. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. (Note: This transaction was not encumbered.) 33 11. [Para. 5-b-11] During August 2014, the city issued a purchase order in the amount of $350 for advertisements soliciting construction bids for the Spruce Street Project. Later in the month, a bill was received in the amount of $340 for the advertisements and a voucher was approved for payment. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals, as applicable. 12. [Para. 5-b-12] Two property owners along Elm Street claimed a new sidewalk was constructed further from the street than where they had granted easements. A resurvey confirmed that the sidewalk was constructed in the wrong place, but the city did not believe that the property owners were entitled to damages. The property owners sued the city in court and were awarded a total of $9,000, which was recorded as a judgment liability during October 2014. The amount will be borne by the Street Improvement Fund; it will not be recoverable from the contractor. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. You should debit Construction Expenditures in the Street Improvement Fund and Construction in Progress at the governmentwide level. 13. [Para. 5-b-13] Construction bids for the Spruce Street Project were opened and evaluated. A bid in the amount of $1,500,000 was accepted, and the contract, bearing a 4 percent retention clause was signed in October 2014. Required: Record this transaction in the Street Improvement Fund. 14. [Para. 5-b-14] In November 2014, the 3% certificates of deposit matured; the face amount of $1,000,000 plus interest of $15,000 was collected. The interest is considered revenue of the Street Improvement Fund. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. 15. [Para. 5-b-15] All outstanding vouchers were paid. In addition, the judgment payable (see Transaction 12) and interest thereon of $90 were paid on the same date. The interest is to be borne by the Street Improvement Fund and is not to be capitalized. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. The $90 interest should be debited to Interest Expenditures in the Street Improvement Fund journal and to ExpensesGeneral Government in the governmental activities journal. 34 16. [Para. 5-b-16] In late November 2014 the Elm Street project was completed and the contractor for the project requested a final payment of $980,000. This amount was recorded as a liability. Payment was made, less the retained percentage, on December 1, 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. 17. [Para. 5-b-17] Additional sales taxes were collected in the amount of $310,000 prior to December 1, 2014. $200,000 of this amount was invested in 3% U.S. Treasury notes at par. No interest was accrued on the notes at date of purchase. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. 18. [Para. 5-b-18] Upon final inspection of the Elm Street Project, the city inspector determined that all work conformed to specifications. Retained percentages (Transactions 9 and 16) were paid to the contractor. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. Total construction costs for the Elm Street Project should be capitalized in the Infrastructure account in governmental activities. 19. [Para. 5-b-19] Based on retail sales estimates from the state Department of Revenue, additional sales taxes were accrued in the amount of $40,000. On December 31, 2014, $500 of interest was accrued on the investment in Treasury notes. Fair market value of these notes was the same as cost on December 31, 2014. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. 20. Verify the accuracy of all your preceding entries in the Street Improvements Fund and governmental activities general journals, then click [Post Entries] of each entity to post the entries to the respective general ledgers. For the Street Improvement Fund only, prepare year-end closing entries for 2014 and post them to the fund's general ledger. (Note: You must click on the box for [Closing Entry] to check mark it; \"Closing Entry\" will appear in the [Transaction Description] box for the account being closed. Be sure the check mark is present for each account being closed.) Click [Post Entries] to post the closing entry. Under current GASB standards encumbrances and encumbrances outstanding are not reported in any financial statements. Consequently, there is no need to close these accounts since the Spruce Street Project is still underway at year-end. Closing entries will be made in the governmental activities general journal in Chapter 9 of this cumulative problem. Ignore those entries for now. 35 c. Export the post-closing trial balance for year 2014 to an Excel worksheet and use Excel to prepare a balance sheet for the Street Improvement Fund as of December 31, 2014. (See Illustration 4-3 in the textbook for an example of an appropriate format of a governmental fund balance sheet.). In addition, print the post-closing trial balance from the [Reports] drop-down menu. d. Export the pre-closing trial balance for year 2014 to an Excel worksheet and use Excel to prepare a statement of revenues, expenditures, and changes in fund balance for the Street Improvement Fund for the year ended December 31, 2014. (See Illustration 5-3 in textbook for an example of the format of a capital projects fund statement of revenues, expenditures and changes in fund balance.). Print the preclosing trial balance from the [Reports] drop-down menu. [Note: Retain all required printouts and your financial statements in your cumulative folder until directed by your instructor to submit them, unless your instructor prefers to have computer files submitted via e-mail.] 36 Chapter 6 Transactions Affecting General Long-term Liabilities and Debt Service The City of Smithville created a Street Improvement Bond Debt Service Fund to be used to retire the bonds issued for the purposes described in Chapter 5 of this cumulative problem, and to pay the interest on the bonds. The $2,000,000 face value of bonds issued during 2014 are dated January 1, 2014, but were not issued until May 6, 2014. Because bondholders will receive six months of interest on July 1, 2014 in the total amount of $40,000, they were required to pay $28,000 on the date of issue to pay the city for unearned interest from January 1 to May 6. The bonds bear interest of 4 percent per annum. The first interest payment of $40,000 is due July 1, 2014. Subsequent semiannual interest payments will be made January 1 and July 1 of each following year until the maturity of the bonds. Bonds in the amount of $500,000 are to mature five years after the date of the bonds (January 1, 2019), and $100,000 are to mature January 1 of each year thereafter until all the bonds issued in 2014 have been retired. Thus, these bonds are deferred serial bonds as discussed in Chapter 6 of the textbook. Make entries as instructed in the following paragraphs. Bond covenants related to this bond issue require the city to levy property taxes sufficient to make principal and interest payments until the bonds have been retired. The city council has approved a resolution to enable the property tax levy, beginning in fiscal year 2015. a. Prepare general journal entries, as necessary to record the transactions described in paragraph b in the Street Improvement Bond Debt Service Fund general journal and, if applicable, in the governmental activities general journal. Use account titles listed under the drop down [Account (# - Description)] menu. Be sure the year 2014 is selected from the drop-down [Year] menu and the appropriate paragraph number shown in bold-face font below is in the [Transaction Description] box. Please remember that before closing the City of Smithville, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. b. Record the transactions below, as necessary. 1. [Para. 6-b-1] In early May 2014, an amendment to the annual budget for 2014 was approved by the city council for inflows and outflows in the Street Improvement Bond Debt Service Fund related to the bond issue. The debt service fund budget amendment provides for estimated other financing sources of $40,000 for the premium on bonds sold and estimated revenues of $28,000 for accrued interest on bonds sold; and appropriations in the amount of the one interest payment of $40,000 to be made during 2014. (The payment that is due on July 1, 2014.) As the bond issue was not made until May 2014, the city will not levy debt service property taxes until next year. 37 Required: Record the budget for the Street Improvement Bond Debt Service Fund for year 2014. Budgetary entries have no effect on the government-wide accounting records. 2. [Para. 6-b-2] On April 1, 2014, the premium and accrued interest on bonds sold were received by the Street Improvement Bon