Part AChapter 3Scenario and General Fund budgetary journal entriesThe scenario: Croton City maintains four governmentaltype funds: a General Fund, a Library Special Revenue Fund, a Capital Projects Fund, and a Debt Service Fund.Croton City started its calendar year 2019 with the following General Fund balances (all numbers are in thousands of dollars).

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,800

Property taxes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800

Salaries payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 700

Deferred property tax revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

Unassigned fund balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,600

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,600

Croton has adopted the following budgetary and accounting policies: Encumbrance accounting is used only for the acquisition of supplies and for the award of contracts for construction and constructionrelated activities. Open encumbrances lapse at the end of the year, but are considered in developing the next years budget. Because final income tax returns are not required to be filed until April 15 of the year following the end of a calendar year, available for income taxes is defined as taxes expected to be collected within 120 days after the end of the calendar year. Croton allows its employees to accumulate unused vacation days and to receive cash for up to 30 days of unused vacation leave at retirement. Such payments are charged to the departments appropriation for salaries All revenues received by the library from fines, donations, and fundraising events are credited to Revenuesmiscellaneous.General Fund budgetary journal entries: Prepare journal entries to record the following budgetary transactions applicable to the General Fund. Also, prepare an appropriations ledger for the Public safety supplies appropriation. (Because you will need to prepare trial balances for each of the funds for Part D of this problem, it is suggested that you post the opening trial balance and the journal entries to general ledger T accounts.) 1. The Croton council adopted the following General Fund budget for 2019:

Revenuesproperty taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,000

Revenuespersonal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Revenuesintergovernmental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000

Revenuesrecreation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600

Appropriations: Public safety salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000

Public safety supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500

Public works salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Parks salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,300

Transfer to Library Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Transfer to Debt Service Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

2. Crotons Public Safety Department placed two purchase orders against its supplies appropriation, one for $300 for firearms and one for $150 for uniforms. 3. The firearms were received, with an invoice for $330. The purchase order allowed shipment of 10 percent over the amount ordered, so the invoice was approved. 4. The invoice for firearms was paid. 5. The Croton Cats won the World Series. To provide more funds for crowd control at the parade, the council increased the Public safety salaries appropriation by $100.

Part B (1)Chapter 5Journal entries for General Fund financial transactions for Croton City

Prepare journal entries, as appropriate, to record these transactions. (We suggest you post the journal entries to

general ledger T-accounts.) Note: The Croton City continuing problem is introduced in Chapter 3 on page 3-32.

You should review the scenario in Chapter 3 before preparing the journal entries for the General Fund in this

chapter.

1. Of the $800 in property taxes receivable at January 1, $780 was collected in cash. The remaining $20 was

written off as uncollectible. Deferred property taxes at the beginning of the year were recognized as revenue

($300).

2. Accrued salaries from the previous year ($700) were paid.

3. Property taxes in the amount of $9,030 were levied in order to provide revenues of $9,000. Tax bills were

sent to the property owners. An allowance for uncollectible taxes was established.

4. During the year, property taxes of $8,100 were collected in cash.

5. The state collects personal income taxes on behalf of the city. During the year, Croton received personal

income taxes of $4,600 from the state.

6. The Parks Department collected $700 in recreation fees during the year.

7. Croton paid salaries of $13,600, charging the salary appropriations as follows:

Public safety $6,700

Public works 4,700

Parks 2,200

8. The state sent the city a check for $1,000 to finance a special public safety program, stipulating that the

resources could be used at any time during 2019 or 2020. The $6,700 in public safety salaries paid in the

previous transaction includes $800 of salaries for this program, so $200 remains available for spending on

the program in 2020.

9. Unpaid salaries at year-end (to be paid during the first week of 2020) were as follows:

Public safety $350

Public works 250

Parks 100

10. At year-end, the uncollected property taxes were declared delinquent. The existing allowance for uncollect-

ible taxes is reclassified to delinquent. Crotons director of finance estimated that $500 of the uncollected

taxes would be collected in January and February 2020 and $400 would be collected during the rest of 2020.

11. In January 2020, the state advised Croton that the state held $500 in personal income taxes on the citys

behalf and that it would send the taxes to Croton by February 10. It also told Croton that it was likely that,

by April 30, Croton would receive an additional $200 of taxes with final returns, but that tax refunds would

probably be $300. (Remember that available for income taxes is defined as taxes expected to be collected

within 120 days after the end of the calendar year.)

12. Police officers who retired at the end of 2019 will be paid $10 for unused vacation pay on January 6, 2020.

Part B (2)Chapter 5Journal entries for Special Revenue Fund transactions

The Library Special Revenue Fund commenced calendar year 2019 with a cash balance of $5, no liabilities, and a

restricted fund balance of $5. Prepare journal entries to record these transactions in the Library Special Revenue

Fund and, where appropriate, in the General Fund. (We suggest you post opening balances and the journal entries

to general ledger T-accounts.)

1. The General Fund transferred $100 cash to the Library Special Revenue Fund to help the library finance its

activities for the year.

2. The library received a grant of $300 from the county. The grant must be used only for library purposes, but

there is no requirement as to when it must be spent.

3. The library received $20 from fines, donations, and various fundraising events.

4. The library paid $350 for salaries and $40 to acquire books and periodicals. Charge the Expendituresculture salaries and Expendituresculture supplies accounts, respectively.

Part C (1)Chapter 6Journal entries for Capital Projects Fund transactions

At the start of 2019, Crotons Capital Projects Fund had no assets or liabilities. Prepare appropriate journal en-

tries to record these transactions in the Capital Projects Fund. (We suggest you post the journal entries to general

ledger T-accounts.)

1. Croton undertook construction of a new police station, designed to house both the Croton police and the

county sheriff and to serve as a detention center. To finance construction, Croton received a cash grant of

$1,000 from the county as an advance pending incurrence of expenditures. It also sold $2,000 of 20-year

general obligation bonds. The bonds, sold April 1, 2019, were to be redeemed in equal semiannual install-

ments of principal, with interest on the unpaid balance at the rate of 5 percent per annum, starting October

1, 2019.

2. Croton awarded two contracts, one for architectural and construction supervision services ($200) and one

for construction ($2,800).

3. The construction contract was completed in a timely manner, and the contractor submitted an invoice for

$2,800. The invoice was paid, except that 5 percent was withheld, pending completion of inspection.

4. All construction and construction supervision work was completed. The construction architect/supervisor

was paid in full, and the contractor was paid the balance due.

Part C (2)Chapter 6Journal entries for Debt Service Fund transactions

At the start of 2019, Crotons Debt Service Fund had no assets or liabilities. Prepare appropriate journal entries

to record these transactions in the Debt Service Fund and where appropriate, in the General Fund. (We suggest

you post opening balances and the journal entries to general ledger T-accounts.)

1. The General Fund transferred $1,200 cash to the Debt Service Fund.

2. The first installment of principal and interest on the bonds sold in Part C (1) came due for payment.

3. The principal and interest due for payment were paid.

4. Debt service on bonds sold by Croton in previous years came due and was paid. Principal and interest pay-

ments on those bonds were $600 and $470, respectively.

Part DChapter 9Preparation of fund financial statements and schedules

Prepare preclosing trial balances for all funds. Prepare a governmental funds balance sheet; a governmental funds

statement of revenues, expenditures, and changes in fund balances; and a General Fund budgetary comparison

schedule. Consider all funds as major funds for this exercise, and classify the fund balance for the Debt Service

Fund as Assigned fund balance. In addition, make calculations to determine which of the funds would be consid-

ered as nonmajor if Croton had not considered all of them to be major.

Part EChapter 10Preparation of journal entries for government-wide financial statements and preparation

of government-wide financial statements

The following additional information is furnished to complete this part of the problem.

1. Croton has no activities other than governmental activities. The citys government-wide statement of net

position for the year ended December 31, 2018, showed general capital assets of $14,000 and related ac-

cumulated depreciation of $6,400.

2. Depreciation expense on Crotons general capital assets for 2019 (including assets acquired in 2019) was

$700, all of which was applicable to public safety.

3. The citys government-wide statement of net position for the year ended December 31, 2018, showed bonds

payable of $5,500. All the debt had been issued to finance capital assets. Analysis of Crotons debt service

requirements showed that $700 of the total bonds payable as of December 31, 2019, should be reported as

current because it is due to be paid during 2020.

4. The citys government-wide statement of net position for the year ended December 31, 2018, showed ac-

crued interest payable of $120 on its outstanding long-term debt. Analysis of the citys debt service require-

ments showed accrued interest payable of $135 on all outstanding long-term debt as of December 31, 2019,

including the debt sold by the city during 2019.

5. Crotons government-wide statement of net position for the year ended December 31, 2018, showed accrued

vacation pay of $75. Vacation leave records showed that, as of December 31, 2019, accumulated vacation

leave had increased to $87, exclusive of the $10 due to be paid to retired police officers early in 2020. (As-

sume vacation leave applies only to the public safety function.)

Use the preceding information to do the following:

a. Prepare journal entries needed to convert the governmental funds financial statements to the governmental

activities columns of the governmentwide financial statements. Review and make adjustments for journal

entries made in Chapter 5 and Chapter 6 portions of this problem for revenuesproperty taxes; deferred

property tax revenue; other financing sourceslongterm debt issued; expenditurescapital outlay;

expendituresbond principal; and transfers in and out. Then, record journal entries for 1 through 5 above.

Post the journal entries to a sixcolumn worksheet similar to that shown in Table 10-8.

b. Prepare Croton Citys governmentwide financial statementsa statement of net position and a statement of

activities.

c. Prepare Crotons financial statement reconciliationsthe funds balance sheet to the governmentwide

statement of net position and the funds statement of revenues, expenditures, and changes in fund balances to

the governmentwide statement of activities