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\fInstructions City of Bingham 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 1 Table of Contents Chapter 1 Introduction and Use of the City of Smithville/City of Bingham Software ................................... 3 Project Instructions and Information ...................................... 13 Chapter 2 Opening the Books ............................................. 14 Chapter 3 Recording the Annual Budget ............................... 19 Chapter 4 Recording Operating Transactions the General Fund and Governmental Activities at the Government-wide Level ........................................... 21 Chapter 5 Recording Capital Assets and Capital Projects Transactions .............................................. 27 Chapter 6 Transactions Affecting General Long-term Liabilities and Debt Service ................................. 30 Chapter 7 Recording Transactions Affecting the Enterprise Fund and Business-type Activities ..................................................................... 34 Chapter 8 Recording Transactions Affecting a Fiduciary Fundan Investment Trust Fund ........................... 38 Chapter 9 Adjusting and Closing Entries for Governmental Activities, Government-wide Level; Preparation of Government-wide and Major Fund Financial Statements ........................................ 41 Chapter 10 Analysis of Financial Condition ............................ 43 Chapter 11 Preparation of Audit Report ................................. 43 Appendix A .................................................................. 44 2 CHAPTER 1 INTRODUCTION AND USE OF THE CITY OF SMITHVILLE/CITY OF BINGHAM SOFTWARE Welcome Thank you for purchasing the City of Smithville/City of Bingham Governmental Accounting Software. This software is designed to be used with the McGraw-Hill/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 Smithville_Bingham folder because start instructor is an .exe file and will run only in Windows environment. Licensing This manual was written for use with the City of Bingham application. 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, 3 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 4-11 before beginning your first assignment. Refer back to this information as needed.] RUNNING OR REMOVING THE CITY OF BINGHAM Running the City of Bingham The City of Bingham can be started by clicking on the Smithville_Bingham folder as indicated in the \"Opening the City of Bingham\" instructions below. As the City of Bingham 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 Bingham. 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 Bingham You can remove the City of Bingham by deleting the Smithville_Bingham folder. It is unnecessary to uninstall the software. GENERAL OPERATING INSTRUCTIONS Opening the City of Bingham You can open the City of Bingham at any time by clicking on the Smithville_Bingham folder and then clicking on either the Program or Start icon. The application requires the Web Browser pop-up blocker be turned off in order to run the application properly. 4 Creating a New Project If you will need the instructions for the Bingham 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 Bingham 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 \"City of Bingham\" 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 hard-drive failure or file corruption, we recommend that you create a dated backup file on a removable device (CD/DVD/USB Flash Drive) or a server at the end of each session. This 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 5 until you have saved your project file or all changes made during the current session will be lost. 6 City Of Bingham 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 you are in. 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. 7 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 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. 8 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]. 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 to the appropriate accounts then click [Post Entries] and your corrections will be made to the appropriate accounts. If you need to add an 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. 9 Working with the Ledger Screen Switch to the Ledgers screen by clicking on the Ledger tab. Switch entities at any time by changing the selection. Depending on the fund or entity on 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 Bingham uses a Detail Journal to avoid recording operating or budget detail in the general journal/ledgers. If you choose a 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. 10 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 (Not preferred) All of the reports for the City of Bingham 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. 11 Exporting Trial Balances (Preferred Method) 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, add the instruction number before the default file name and folder location, and save it. You can change the file name and/or location if you prefer. For example, the Excel output file from instruction Chapter 2 - letter \"b\" should be named \"2b-Post-Closing Trial Balance to ExcelGeneral Fund2013\". 12 Instructions and Information for Completing Chapters 2 through 10 and 11 of the City of Bingham This version of a cumulative problem written for the computer presents a series of transactions, covering activities of the City of Bingham, assuming the city utilizes the dual-track accounting approach to the GASB governmental 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, 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. If you have not yet read the Chapter 1 instructions for using the City of Bingham software program, you should do so before beginning the project. When finished reading those instructions, begin the project with Chapter 2 of the instructions as you complete Chapter 2 of the textbook. Some problems require you to export trial balances or other documents. Other problems require the preparation of financial statements. 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 a spreadsheet file containing your trial balances, financial statements, and other required documents to an e-mail for submission. 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 Bingham 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 the deadline for 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. 13 Chapter 2 Opening the Books The City of Bingham has installed a new computerized accounting system, which provides files for general journal entries and posting to appropriate general ledger/subsidiary ledger accounts. Accounts are provided for both budgetary and operating statement accounts and balance sheet accounts for the General Fund, as well as accounts needed for governmental activities at the government-wide level. Accounts are also provided as appropriate for all other funds used by the City of Bingham, which you will use in Chapters 5-9 of the problem. To begin this case, you must enter the city's initial accounting information as of December 31, 2013, so that all transactions can be recorded for the next fiscal year beginning January 1, 2014. Required Open the City of Smithville/City of Bingham 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 Bingham 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 Bingham\" 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 device (e.g., flash drive), or location other than your hard 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 14 Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Due from Other Funds Due from State Government Inventory of Supplies Vouchers Payable Tax Anticipation Notes Payable Due to Other Funds Due to Federal Government Due to State Government 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 Estimated Other Financing UsesInterfund Transfers Out Expenditures Other Financing UsesInterfund Transfers Out Encumbrances b. The post-closing trial balance for the General Fund of the City of Bingham as of December 31, 2013, is shown on the following page. Select the [Journal] view 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 drop-down [Year] menu and enter the paragraph number from these instructions in the [Transaction Description] box of the [Journal] view. For this entry you should enter 2-b. Select the appropriate accounts individually and insert the appropriate amounts. (Note: Enter all dollar 15 amounts without dollar signs and without commas. 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 should remain in the boxes for the rest of the accounts. When you have completed entering all account data and amounts, verify the accuracy of all 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/City of Bingham 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. Export the post-closing trial balance for year 2013 and save in the Excel template. CITY OF BINGHAM General Fund Post-closing Trial Balance As of December 31, 2013 General Ledger Account Title Debits Cash $ 110,000 Taxes ReceivableDelinquent 470,000 Estimated Uncollectible Delinquent Taxes Interest and Penalties Receivable on Taxes 23,690 Estimated Uncollectible Interest and Penalties Vouchers Payable Due to Other Funds Fund BalanceAssignedGeneral Government Fund BalanceCommittedPublic Safety Fund BalanceCommittedPublic Works Fund BalanceUnassigned Totals $ 603,690 Credits $ 42,500 1,304 394,000 13,000 30,560 15,200 28,300 78,826 $ 603,690 c. Select [Governmental ActivitiesGovernment-Wide] in the [Current Accounting Entity] drop-down menu and the [Accounts] view tab. You will see all of the accounts included in the trial balance on the next page, plus many other accounts that will be used in the various chapters of the City of Bingham project. d. Select the [Journal] view and create a journal entry to enter the statement of net position (i.e., balance sheet) accounts and amounts shown in the governmental 16 activities, government-wide post-closing trial balance presented on the next page. 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 [Year] menu and enter 2-d in the Transaction Description box. Select each account individually and insert the appropriate debit or credit amount for each account. CITY OF BINGHAM Governmental Activities, Government-wide Level Post-closing Trial Balance As of December 31, 2013 Account Title Cash Taxes ReceivableDelinquent Estimated Uncollectible Delinquent Taxes Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Land Improvements Other than Buildings Accumulated DepreciationImprovements Other Than Buildings Infrastructure Accumulated DepreciationInfrastructure Buildings Accumulated DepreciationBuildings Equipment Accumulated DepreciationEquipment Vouchers Payable Accrued Interest Payable on Long-term Debt Internal Payables to Business-type Activities Current Portion of Long-term Debt 6% Serial Bonds Payable Net PositionNet Investment in Capital Assets Net PositionRestricted for Debt Service Net PositionUnrestricted Totals Debits $ 1,090,000 554,000 Credits $ 98,500 31,290 2,064 1,100,000 9,000,000 2,100,000 29,190,000 11,280,000 9,300,000 2,100,000 7,600,000 $57,865,290 3,664,000 394,000 360,000 13,000 600,000 11,400,000 25,046,000 654,840 152,886 $57,865,290 e. When you have completed entering the initial data, verify the accuracy of all entries and click [Post Entries] to post the entries to the governmental activities, government-wide general ledger. f. Export the trial balance according to the instructions on page 18 17 Before closing the City of Bingham click on [File] and [Save/Save As] to save your work. Your work is NOT automatically saved. 18 Chapter 3 Recording the Annual Budget The following budget for the General Fund of the City of Bingham was legally adopted for the fiscal year ending December 31, 2014. Estimated Revenues: Property Taxes Sales Taxes Interest and Penalties on Taxes Licenses and Permits Fines and Forfeits Intergovernmental Revenue Charges for Services Miscellaneous Revenues Total Estimated Revenues $6,000,000 250,000 44,000 477,000 603,000 500,000 360,000 125,000 $8,359,000 Appropriations: General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Total Appropriations $1,510,000 3,370,000 1,450,000 965,000 770,000 95,000 $8,160,000 Estimated Other Financing Uses: Interfund Transfers Out $ 90,000 Required a. Launch the program and select [Open Existing Project] and then select the file you saved at the end of your Chapter 2 session. Select [General Fund] in the [Current Accounting Entity] drop-down menu, if it is not already displayed. Select the [Journal] tab. In the [Year] menu, be sure to select the year 2014. Enter 3-a in the [Transaction Description] box and record the budget adopted for fiscal year 2014. Begin by selecting \"Estimated Revenues\" in the drop down [Account #-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 balance 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 19 Estimated Revenues control account. Follow the same procedure to record the budget detail for Appropriations. Complete the General Journal entry by crediting \"Estimated Other Financing UsesInterfund Transfer Out,\" and 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 government-wide level, so the budget information is only recorded in the General Fund. When you are satisfied you have made the entries correctly, post them to the General Ledger by clicking on [Post Entry]. Before posting, or after unposting as described previously, you can edit your journal entries by placing the cursor in the line you want to edit, then right-clicking and selecting \"Edit.\" After unposting, an unposted entry can be edited or deleted, and any omitted entry can be inserted above a highlighted unposted entry. b. Go to [Reports], export the pre-closing subsidiary ledgers and pre-closing trial balance for year 2014 following the export and naming convention described on page 18. 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 Bingham, click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 20 Chapter 4 Recording Operating Transactions Affecting the General Fund and Governmental Activities at the Government-wide Level Presented below are a number of transactions that the City of Bingham made during the 2014 fiscal year; the fiscal year for which the budget given in Chapter 3 was recorded. Launch the software program and select [Open Existing Project] and open the project data file you saved at the end of your Chapter 3 session. Read and follow these instructions carefully. a. 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 last. If you choose the latter method, it might be useful to export the General Fund general journal entries to assist in making the entries in the governmental activities journal. Regardless of the method you choose, we highly recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck, Lowensohn, and Wilson textbook (16th Edition) for guidance in making all entries. For each entry affecting budgetary accounts or operating statement accounts, you will be sent to the Detail Journal, as was the case in Chapter 3, to record the appropriate amounts in the detail budgetary or actual accounts. Be sure to record the paragraph number (e.g., 4-a-1) in the [Transaction Description] window for each entry. 1. [Para. 4-a-1] Tax anticipation notes were issued in the amount of $400,000. 2. [Para. 4-a-2] Property taxes were levied in the amount of $6,200,000. It is estimated that 3 percent of the tax will be uncollectible. 3. [Para. 4-a-3] The General Fund paid $350,000 on the vouchers payable that were outstanding at the end of FY 2013. 4. [Para. 4-a-4] Purchase orders, contracts, and other commitment documents were issued in the following amounts for the following functions: General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Total $ 394,900 1,143,000 915,420 663,600 461,080 86,000 $3,664,000 21 5. [Para. 4-a-5] The General Fund collected the following amounts in cash: Delinquent Taxes, $418,000; Interest and Penalties Receivable on Taxes, $20,860; Sales Taxes, $251,000; Licenses and Permits, $468,000; Fines and Forfeits, $605,000; Intergovernmental Revenues, $500,000; Charges for Services, $351,000; and Miscellaneous Revenues, $110,500. (Note: For the General Fund detail revenue accounts, select \"Received in Cash\" from the drop-down [Transaction Description] menu.) For governmental activities at the government-wide level, all Licenses and Permits and Charges for Services were attributable to the General Government function. Fines and forfeits were collected by General Government departments in the amount of $285,000 and by Public Safety departments in the amount of $320,000. Intergovernmental Revenues should be credited to \"Program RevenuesGeneral GovernmentOperating Grants and Contributions.\" 6. [Para. 4-a-6] The General Fund paid the $13,000 reported as Due to Other Funds at the end of FY 2013. This amount was reported as Internal Payables to Business -type Activities at the government-wide level. (Note: Do not record this transaction in the Water Utility Fund until instructed to do so in Chapter 7 of this case.) 7. [Para. 4-a-7] Delinquent taxes receivable in the amount of $26,000 were written off as uncollectible. Interest and penalties accrued on these taxes in the amount of $1,300 were also written off. 8. [Para. 4-a-8] Collections of current year property taxes totaled $5,964,000. 9. [Para. 4-a-9] General Fund payrolls totaled $4,199,100. Of that amount, $553,400 was withheld for employees' federal income taxes, $316,000 for employees' FICA tax liability, and $88,100 for state income taxes; the balance of $3,241,600 was paid in cash. Encumbrances are not used for payroll. The payroll amounts by function are as follows: General Government Public Safety Public Works Health and Welfare Culture and Recreation Total $ 1,135,066 2,047,942 497,464 263,538 255,090 $4,199,100 10. [Para. 4-a-10] A liability was recorded in the amount of $321,000 for the city's share of FICA taxes, applicable to functions in the amounts shown below. General Government Public Safety Public Works Health and Welfare Culture and Recreation Total $ 86,343 157,363 37,842 20,047 19,405 $321,000 22 11. [Para. 4-a-11] Invoices for goods and services ordered in transaction 4-a-4 were received. One of the invoices received was for $51,500 of playground equipment ordered by Culture and Recreation. The equipment meets the city's threshold for capitalization. Vouchers were recorded for the following actual amounts: (Note: At the government-wide level, expenditures charged to miscellaneous are reported as ExpensesGeneral Government.) General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous Totals Actual $ 399,940 1,123,650 902,300 681,200 438,750 83,600 $3,629,440 Estimated $ 392,060 1,128,600 907,620 663,600 452,000 85,000 $3,628,880 12. [Para. 4-a-12] The General Fund paid its liability for employees' federal and state income taxes withheld and the total liability for FICA taxes. 13. [Para. 4-a-13] The General Fund transferred $90,000 to the debt service fund so the debt service fund could make a bond interest payment. (Note: Because this transaction involves two governmental funds it is not recorded in the governmental activities journal. Do not record this transaction in the debt service fund until instructed to do so in Chapter 6 of this case.) 14. [Para. 4-a-14] Tax anticipation notes issued by the General Fund were paid at maturity at the face amount plus interest of $10,000. For the General Fund charge Miscellaneous for the interest expenditure. At the government-wide level, debit ExpensesInterest on Tax Anticipation Notes. 15. [Para. 4-a-15] The General Fund paid vouchers during the year in the amount of $3,500,000. 16. [Para. 4-a-16] The General Fund recorded liabilities of $40,000 to other funds for services received from the Water Utility Fund during the year. Of this amount, $31,000 should be charged to Public Safety and $9,000 to General Government. At the government-wide level, you should credit Internal Payables to Business-type Activities. (Note: Do not record this transaction in the Water Utility Fund until instructed to do so in Chapter 7 of this case.) 17. [Para. 4-a-17] The balances in the current taxes receivable and related estimated uncollectibles accounts were reclassified as delinquent. Interest and penalties of 23 $52,480 were recorded on the delinquent taxes, of which $10,500 was estimated to be uncollectible. 18. [Para. 4-a-18] In view of unexpected revenue and expenditure developments the city council revised the budgets for the current year as shown below: Budget Adjustments Inc. (Dec.) Estimated Revenues: Licenses and Permits Charges for Services Miscellaneous Revenue $ (10,000) (6,000) (15,000) Appropriations: General Government Public Safety Public Works Health and Welfare Culture and Recreation Miscellaneous 125,000 5,000 (4,000) 0 (46,000) 0 19. [Review and Post all Entries] 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. 20. [Closing Entry] Following the instructions in the next paragraph, prepare and post the necessary entries to close the Estimated Revenues, Appropriations, and Estimated Other Financing UsesInterfund Transfers Out accounts to Budgetary Fund Balance; and Revenues, Expenditures, and Other Financing UsesInterfund Transfers Out to Fund BalanceUnassigned. Because the City of Bingham 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. However, if 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, with the exception of Estimated Other Financing UsesInterfund Transfers Out and Other Financing UsesInterfund Transfers Out, you will be sent to the Detail Journal where you must close each individual 24 budgetary or operating statement account. To determine the closing amounts for both General Ledger and subsidiary ledger accounts, you should first export the pre-closing version of these ledgers for year 2014 into an Excel file. 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 BalanceUnassigned 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 BalanceAssignedGeneral Government Fund BalanceAssignedCulture and Recreation Fund BalanceCommittedPublic Safety Fund BalanceCommittedPublic Works Amount $55,660 7,500 11,400 36,790 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 or other worksheet of the General Fund post-closing trial balance as of December 31, 2014. Use Excel or other spreadsheet software 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.\"). c. Select \"Export\" from the drop down [File] menu to create an Excel or other worksheet of the General Fund pre-closing subsidiary ledger account balances for the year 2014. Use Excel or other spreadsheet software to prepare in good form a statement of revenues, expenditures, and changes in fund balances 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 or other worksheet of the General Fund pre-closing subsidiary ledger account balances created in part c above to prepare in good form a statement of revenues, expenditures, and changes in fund balancesbudget 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 part d of this problem. (See example in Chapter 4 of the textbook following Illustration 4-5, which compares Illustrations 4-4 and 4-5.) 25 [Note: Copy the exported files into the appropriate worksheet (tab) of the Excel template until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail.] Before closing the City of Bingham click on [File] and [Save/Save As] to save your work. Your work is NOT automatically saved. 26 Chapter 5 Recording Capital Asset and Capital Project Transactions City Hall Annex Construction Fund and Governmental Activities at the Government-wide Level During fiscal year 2013, the voters of the City of Bingham approved the issuance of 3 percent tax supported bonds in the face amount of $6,000,000 to construct and equip an annex to the City Hall. The bonds are to mature in blocks of $250,000 every six months over a 12-year period commencing January 1, 2015. Required a. Record the following transactions in the general journals of the City Hall Annex Construction Fund and governmental activities at the government-wide level. Do not record entries at this time in any other affected funds; those entries will be made in later chapters of this cumulative problem that cover those funds. Use account titles listed under the drop-down [Account #-Account Description] menu. Select 2014 for each transaction in the [Year] menu of the [Journal] view. Enter the paragraph reference; i.e., 5-a-(1, 2, 3, etc.), corresponding to each transaction in the [Transaction Description] box. The following account titles should appear in the [Accounts] view: Cash Investments Special Assessments ReceivableCurrent Interest Receivable on Investments Vouchers Payable Judgments Payable Contracts Payable Contracts PayableRetained Percentage Fund BalanceRestricted Encumbrances Outstanding Revenues Other Financing SourcesProceeds of Bonds Construction Expenditures Interest Expenditures Other Financing UsesInterfund Transfers Out Encumbrances Please remember that before closing the City of Bingham, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. 1. [Para. 5-a-1] On the first day of the 2014 fiscal year (January 1, 2014), the bond issue was sold at 101. Cash in the face amount of the bonds, $6,000,000, was deposited in the City Hall Annex Construction Fund; the premium was deposited in 27 the debt service fund, as required by state law. Make the appropriate entries in the general journals of the Capital Projects Fund and governmental activities at the government-wide level. Wait until instructed in Chapter 6 to make the corresponding entry in the debt service fund. 2. [Para. 5-a-2] The city invested $3,000,000 of the bond proceeds in 90-day notes. 3. [Para. 5-a-3] The City Hall Annex Construction Fund purchased land for the annex for $500,000. This amount was vouchered. In the governmental activities general journal at the government-wide level, this purchase should be debited to Land. 4. [Para. 5-a-4] A contract for architectural services was signed at an estimated amount of $320,000 for the design of the City Hall Annex. 5. [Para. 5-a-5] Legal and other capitalizable costs of the bond issue were vouchered in the amount of $100,000. 6. [Para. 5-a-6] Preliminary plans were received (related to the contract signed in paragraph 5-a-3) for which architectural fees of $75,000 were vouchered. 7. [Para. 5-a-7] Advertisements soliciting construction bids were vouchered at a cost of $4,000. 8. [Para. 5-a-8] Vouchers payable were recorded in the amount of $260,000 for the final architectural plans and specifications for the construction project (see para. 5-a-4). 9. [Para. 5-a-9] Construction bids were opened and analyzed. A contract was signed with the firm that submitted the winning bid of $4,000,000. A provision of the contract permits the city to withhold 5 percent of payment pending final acceptance of the completed project. 10. [Para. 5-a-10] The 90-day notes matured, paying $11,250 in interest (see para. 5-a-2). The interest should be recorded as general revenue in the governmental activities journal. 11. [Para. 5-a-11] The contractor submitted a billing for $2,000,000. This amount was recorded as a contract payable. 12. [Para. 5-a-12] The contractor's billing (see para. 5-a-11) was paid, less a 5 percent retained percentage. 13. [Para. 5-a-13] All pending vouchers were approved and paid. 28 14. [Para. 5-a-14] Furniture and equipment for the annex were ordered at an estimated total cost of $685,000. 15. [Para. 5-a-15] The contractor completed construction, submitted the final bill, and requested payment of the balance due. A liability was recorded in the amount of $2,300,000. 16. [Para. 5-a-16] After final inspection, a final payment was made to the contractor, including the amount retained in para. 5-a-12. 17. [Para. 5-a-17] Furniture and equipment were received (see para. 5-a-14) at a total cost of $681,500. Invoices were vouchered for payment. In the governmental activities general journal, you should debit Equipment. 18. [Para. 5-a-18] The City Hall Annex Construction Fund paid all outstanding liabilities on December 31, 2014. The completed building was recorded in the governmental activities general journal. Remaining cash in the City Hall Annex Construction Fund was transferred to the debt service fund. (Note: Record the transfer of cash in the City Hall Annex Construction Fund general journal. Do not record the transfer in the debt service fund until you are instructed to do so in Chapter 6. This transaction involves two governmental funds.) 19. Verify the accuracy of all your preceding entries in the general journals of the City Hall Annex Construction Fund and governmental activities at the government-wide level, then click [Post Entries] of each entity to post the entries to the respective general ledgers. For the City Hall Annex Construction Fund only, prepare year-end closing entries for 2014 and post them to the fund's general ledger. (Note: Be sure to click on the check mark for [Closing Entry] and that \"Closing Entry\" appears in the [Transaction Description] box for the accounts being closed.) Click [Post Entries] to post the closing entry. Closing entries will be made in the governmental activities general journal in Chapter 9 of this cumulative problem. Ignore those entries for now. c. Export the pre-closing trial balance for year 2014 to an Excel or other worksheet to prepare a statement of revenues, expenditures, and changes in fund balances for the City Hall Annex Construction Fund for the year ended December 31, 2014. (See Illustration 5-3 in the textbook for an example of the format of a capital projects fund statement of revenues, expenditures and changes in fund balance.). Export the pre-closing trial balance according to the instructions on page 18. (Note: A balance sheet is not required since the capital project fund was closed prior to end of FY 2014.) [Note: Copy the exported files into the appropriate worksheet (tab) of the Excel template until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail.] 29 Chapter 6 Transactions Affecting General Long-Term Liabilities and Debt Service a. The City of Bingham utilizes a single debt service fund to account for the service of all issues of tax-supported and special assessment long-term debt. As of December 31, 2013, one issue of tax-supported serial bonds was outstanding. The post-closing trial balance of the debt service fund as of December 31, 2013, is shown below. The issue of tax-supported serial bonds outstanding on December 31, 2013, amounted to $12,000,000. Bonds of this issue in the amount of $600,000 mature on January 1 of each year. This bond issue bears interest at the annual rate of 6 percent, payable on January 1 and July 1 of each year. The cash balance of the debt service fund on December 31, 2013, is restricted for the repayment of tax- supported bond principal and interest payments, such as the principal maturing on January 1, 2014, and bond interest due in 2014. Required: Record the following accounts and balances in the debt service fund general journal, selecting 2013 from the [Year] menu and using para. 6-a for the [Transaction Description]. When completed select [Post Entries] to post the entries in the general ledgers. (Note: These opening balances were previously recorded in the governmental activities general journal in Chapter 2 of this project.) CITY OF BINGHAM Debt Service Fund Trial Balance As of December 31, 2013 Debits $ 980,000 84,000 Cash Taxes ReceivableDelinquent Estimated Uncollectible Delinquent Taxes Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Fund BalanceRestricted Totals Credits $ 56,000 7,600 760 $1,071,600 1,014,840 $1,071,600 Additional Information: On January 1, 2014, the City of Bingham sold a 12-year issue of tax-supported serial bonds to finance the construction and equipping of an annex to City Hall. As described in Chapter 5 of this cumulative problem, the total amount of bonds issued on that date 30 was $6,000,000, sold at 101. The issue bears interest at the annual rate of 3 percent, payable on January 1 and July 1 of each year; bonds in the amount of $250,000 will mature on January 1, 2015, and every six months thereafter until maturity. The premium on these bonds will be amortized using the effective interest rate method. Cash for the payment of interest in 2014 will be provided by the General Fund (see Chapter 4). Please remember that before closing the City of Bingham, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. Required: b. Prepare general journal entries, as necessary to record the following transactions in the debt service fund general journal and, if applicable, in the governmental activities general journal. Use account titles listed in the drop down Account #-Account Description menu for each of these accounting entities. Be sure to select 2014 from the [Year] menu of the [Journal] view. Enter the appropriate paragraph number shown below in bold-face font in the [Transaction Description] box. 1. [Para. 6-b-1] From the data given about the bond issue already outstanding on January 1, 2014, and the City Hall Annex Construction Fund bond issue sold on that date, record the adoption of the legal budget for the fiscal year ended December 31, 2014. The budget provides for estimated revenues of $1,600,000 from property taxes, $7,000 of interest and penalties on taxes, and $17,000 of earnings on investments. It also provides for estimated other financing sources for premiums on bonds of $60,000 and interfund transfers in from the General Fund of $90,0000. Appropriations of $1,392,000 were provided for the payment of bond principal of $600,000 maturing on January 1, 2014 and $792,000 for bond interest payments due on January 1, 2014, and July 1, 2014 (.03 X $12,000,000 + .03 X $11,400,000 + .015 X $6,000,000). 2. [Para. 6-b-2] Taxes were levied by the debt service fund in the amount of $1,620,000. Of this amount, $20,000 was expected to be uncollectible. 3. [Para. 6-b-3] Cash in the amount of the $60,000 premium on the bonds sold on January 1, 2014 was received and recorded in the debt service fund. The premium will be amortized in governmental activities at the government-wide level but not in the debt service fund. In the debt service fund journal entry, you should credit Other Financing SourcesPremium on Bonds for the entire $60,000. The credits for this entry in the governmental activities general journal were made as part of the requirements for Chapter 5. 4. [Para. 6-b-4] Temporary investments were purchased in the amount of $50,000. 31 5. [Para. 6-b-5] Checks were written and mailed to bondholders for bonds maturing on January 1, 2014, and to pay all bond interest due that day. In the governmental activities general journal, debit Accrued Interest Payable as these amounts were expensed on December 31, 2013, the end of the preceding fiscal year. 6. [Para. 6-b-6] Current taxes receivable were collected in the amount of $1,030,000. Also, delinquent taxes receivable were collected in the amount of $8,000, along with Interest and Penalties Receivable on Taxes of $700. 7. [Para. 6-b-7] Temporary investments were purchased in the amount of $900,000. 8. [Para. 6-b-8] Interest on temporary investments was received in cash in the amount of $7,000. 9. [Para. 6-b-9] Temporary investments amounting to $400,000 were sold at par. 10. [Para. 6-b-10] On July 1, the debt service fund received $90,000 from the General Fund for interest payment on the 3% serial bonds. Checks were written and mailed to bondholders for all of the interest payments due July 1, 2014. At the government-wide level, $1,827 was debited for amortization of the premium on bonds sold for the 3% serial bonds. 11. [Para. 6-b-11] Current taxes of $520,000, delinquent taxes of $9,000, and interest and penalties on taxes of $815 were collected. 12. [Para. 6-b-12] The uncollected balance of current taxes receivable and the related estimated uncollectible account were reclassified as delinquent. Interest and penalties of $1,200 were accrued, of which $120 was estimated to be uncollectible. 13. [Para. 6-b-13] Cash to close the City Hall Annex Construction Fund was received in the amount of $90,750. (See Chapter 5, Para. 5-a-18). The city council authorized a budget amendment for this unexpected transfer. 14. [Para. 6-b-14] At December 31, 2014, interest on temporary investments was accrued in the amount of $8,000. Record in the debt service fund and the governmental activities journal. 15. [Para. 6-b-15] At December 31, 2014, accrued interest expense on the two outstanding bond issues was recorded in the governmental activities general journal. Amortization of the premium on the 3% bonds sold was also recorded in the amount of $1,854. 16. Verify the accuracy of journal entries, including dates and paragraph numbers, and, if you have not already done so, post all entries to the general ledger of both the debt service fund and governmental activities by clicking on [Post Entries]. Make the entries needed to close the budgetary and operating statement accounts at the 32 end of fiscal year 2014. Make this entry only in the journal for the debt service fund. Since the resources of the debt service fund are restricted for principal and interest payments, the nominal accounts should be closed to Fund BalanceRestricted. Be sure for each account being closed that the check mark for [Closing Entry] is on and that \"Closing Entry\" appears in the [Transaction Description] box. (Note: Closing entries for governmental activities at the government-wide level will be made in Chapter 9 of this cumulative problem.) c. Export the pre-closing and post-closing trial balances for the debt service fund as of December 31, 2014 according to the instructions on page 18. Copy the exported files into the appropriate worksheet (tab) of the Excel template until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail. d. Export the post-closing trial balance for year 2014 to an Excel or other worksheet to prepare a balance sheet for the debt service fund as of December 31, 2014. e. Export a pre-closing trial balance for year 2014 to an Excel or other worksheet to prepare a statement of revenues, expenditures, and changes in fund balance for the debt service fund for the year ended December 31, 2014. f. Use the same trial balance exported in item e above to prepare a statement of revenues, expenditures, and changes in fund balancebudget and actual for the debt service fund for the year ended December 31, 2014. g. Assuming that the assessed valuation of property within the City of Bingham is $400,000,000, and the legal general obligation debt limit is 10 percent of assessed valuation, compute the legal debt margin of the city as of December 31, 2014. Prepare a schedule in good form showing calculation of the legal debt limit, debt subject to the limit, and debt margin. (Note: Since there is no requirement stating what amount of the restricted fund balance must be dedicated to principal versus interest payment, do not include the amount of restricted fund balance in your calculations.) (See Illustration 6-3 for an example). [Note: Copy the exported files into the appropriate worksheet (tab) of the Excel template until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail.] 33 Chapter 7 Recording Transactions Affecting the Enterprise Fund and Business-Type Activities The city water utility is owned and operated by the City of Bingham. The water utility was originally constructed and operated by a private corporation, but it was sold to the city 30 years before the year for which transactions are given. The post-closing trial balance of the Water Utility Fund, as of December 31, 2013, follows: CITY OF BINGHAM Water Utility Fund Trial Balance As of December 31, 2013 Debits $ 284,904 57,200 160,440 Cash Restricted CashCustomer Deposits Customer Accounts Receivable Accumulated Provision for Uncollectible Accounts Inventory of Supplies 94,146 Due from Other Funds 13,000 Utility Plant in Service 19,000,390 Accumulated Depreciation Utility Plant Construction Work in Progress 1,189,400 Vouchers Payable Customer Deposits Accrued Interest Payable 6% Revenue Bonds Payable Unamortized Bond Discounts on Revenue Bonds Payable 65,200 Net Position, Net Investment in Capital Assets Net Position, Unrestricted Totals $20,864,680 Credits $ 4,720 4,011,278 72,420 57,200 434,100 14,470,000 1,773,712 41,250 $20,864,680 Additional information: The following information is provided about accounts shown on the December 31, 2013, trial balance: Accrued Interest Payable represents six months' accrual of interest on the 6 % revenue bonds payable. Interest is payable semiannually on January 1 and July 1 of each year. Unamortized Bond Discount is credited every six months for the amortization applicable to the interest payment period. Amortization is computed by the straight-line method. The balance of $65,200 is to be amortized over 20 years commencing in 2014. 34 Required a. Prepare general journal entries to record the December 31, 2013, accounts and balances for the Water Utility Fund, selecting the corresponding accounts from drop-down [Account #-Account Description] menu. Be sure to enter 7-a as your paragraph number in the [Transaction Description] box and enter the appropriate paragraph number for all subsequent journal entries. Verify accuracy of your journal entries and post to general ledger by clicking [Post Entries]. Unless your instructor specifies e-mail submission, export a post-closing trial balance as of December 31, 2013 and retain in your cumulative Excel template file until directed by your instructor to turn it in. Note that entries in this enterprise fund do not have to be recorded at the government-wide level since enterprise funds and business-type activities at the government-wide level both use the same (accrual) basis of accounting and same (economic resources) measurement focus. Thus, the same information recorded in the accounts of the enterprise fund can also, with only slight modification, be reported as business-type activities at the government-wide level. b. Record the following events and transactions, which occurred during the year ended December 31, 2014. Be sure to enter the paragraph number shown for each transaction in the [Transaction Description] box. 1. [Para. 7-b-1] Bond interest due on January 1, 2014 was paid to holders of the 6% revenue bonds. 2. [Para. 7-b-2] Billings to customers for water service for the year totaled $3,026,700. Billings to the City of Bingham General Fund for water service totaled $40,000. 3. [Para. 7-b-3] Collections from customers totaled $2,981,100; $13,000 was also received from the city's General Fund. 4. [Para. 7-b-4] A $725,000 contract was signed for a construction project expected to cost $970,000. Water utility employees will complete $245,000 of the project. 5. [Para. 7-b-5] Materials and supplies were ordered and received during the period in the amount of $520,400. The invoices agreed with the purchase orders and receiving reports and were recorded as vouchers payable. A perpetual inventory system is used for all materials and supplies. 6. [Para. 7-b-6] Payrolls were paid totaling $670,530 for operations; $166,400 for maintenance; and $70,500 for construction. 7. [Para. 7-b-7] Materials and supplies issued during the period amounted to $245,000 for operations; $102,000 for maintenance; and $166,000 for construction. 35 8. [Para. 7-b-8] Bond interest due on July 1, 2014 was paid. As part of the journal entry, 1/40th of the Unamortized Bond Discount on Revenue Bonds Payable should be amortized. 9. [Para. 7-b-9] Interest of $29,000 that was recorded as an expense was determined to have been incurred during construction and should be charged to Construction Work in Progress. 10. [Para. 7-b-10] A progress billing for $435,000 was received from the construction contractor and paid. 11. [Para. 7-b-11] Some assets under construction at the start of the year and some started during the year were completed and placed in service. The costs incurred on this construction totaled $902,600. 12. [Para. 7-b-12] Collection efforts were discontinued on bills amounting to $4,050; the customers owing the bills had paid deposits and interest to the water utility in the amount of $1,350. (Note: Remember to adjust cash accounts for amounts no longer restricted.) 13. [Para. 7-b-13] Customer deposits and interest thereon amounting to $2,500 were applied to the final bills of customers discontinuing service. Additional deposits and interest amounting to $3,050 were refunded by check to customers discontinuing service. (Note: Remember to adjust cash accounts for amounts no longer restricted.) Deposits totaling $6,904 were received from new customers. 14. [Para. 7-b-14] Vouchers Payable paid during the year amounted to $332,800 for operating supplies and $166,000 for materials used in construction, or $498,800 in total. 15. [Para. 7-b-15] Interest paid on customer deposits amounted to $1,256 (charge Operation Expense). This interest was added to the customer deposit accounts, and the restricted cash and cash accounts were adjusted. 16. [Para. 7-b-16] Depreciation on utility plant was calculated using a straight-line rate of 2 percent of the beginning gross balance (round charge to the nearest dollar). The Accumulated Provision for Uncollectible Accounts should equal $5,820 at year-end. An adjusting entry for accrual of six months' interest on bonds payable and amortization of 1/40 of the debt discount using the straight-line basis was recorded. 17. After verifying the accuracy of all entries for the preceding transactions, post amounts to the general ledger accounts by clicking [Post Entries]. c. Prepare entries to close all operating statement accounts at the end of 2014 and to reclassify the two net position accounts, as appropriate. Be sure that the check mark for [Closing Entry] is on for each account being closed and that \"Closing Entry\" appears 36 in the [Transaction Description] box. Post the closing entries to the general ledger by clicking [Post Entries]. d. Click on [File]-[Export] to export a post-closing trial balance for year 2014, and use Excel or other spreadsheet software to prepare a statement of net position for the Water Utility Fund as of December 31, 2014. e. Click on [File]-[Export] to export a pre-closing trial balance for year 2014, and use Excel or other spreadsheet software to prepare a statement of revenues, expenses, and changes in net position for the Water Utility Fund for the year ended December 31, 2014. Interest Expense should be considered a nonoperating item. f. Use the post-closing trial balance for year 2013 exported in paragraph 7-a and the trial balances from parts d and e above and use Excel or other worksheet to prepare a statement of cash flows for the Water Utility Fund for the year ended December 31, 2014. Save your project data file and create a dated backup file on a removable device before exiting the browser. [Note: Copy the exported files into the appropriate worksheet (tab) of the Excel template until directed by your instructor to submit them, unless your instructor specifies submission of computer files via e-mail.] 37 Chapter 8 Recording Transactions Affecting a Fiduciary FundAn Investment Trust Fund The city council of the City of Bingham decided in late 2014 to create an investment pool