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1. The Town General Fund Operating Budget Fiscal Year 20XX Estimated Revenues Property taxes Charges for services $1,900,000 360,000 $2,260,000 Appropriations General Government Health & Sanitation $ 320,000 1,800,000 2,120,000 Budgeted Increase in Fund Balance $ 140,000 Operating transactions during the year consist of the following: 1. 2. 3. 4. 5. 6. 7. Placed orders for materials and supplies for $1,756,000 Collected revenues of $2,187,500 Received items on order for $930,000 Paid cash for items received for $931,000 Received items on order for $116,000 Paid cash for items received for $114,000 Collected revenues of $81,000 Required: Prepare the general journal entries necessary to record the budget and operating transactions 1- 7. 2. Presented below is the adjusted trial balance for the Special Revenue Fund of the Town at June 30, 20XX, the end of the fiscal year. Based on this information, prepare, in good form: a. closing entries b. the statement of revenues, expenditures, and changes in fund balance for the year c. the balance sheet at June 30, 20XX. (Classify the fund balance as Unassigned.) Town Special Revenue Fund Adjusted Trial Balance June 30, 20XX Cash $ 5,200 Taxes receivable 41,000 Investments 65,000 Vouchers payable 37,750 Tax anticipation notes payable 13,750 Unassigned fund balance 57,000 Estimated revenues 101,000 Appropriations 99,000 Budgetary fund balance Revenues-taxes 101,000 Revenues-other 1,080 Expenditures-personal services Expenditures-supplies 3. 2,000 93,700 5,680 0 $ 311,580 $ 311,580 Prepare entries to record the following transactions related to acquisition of capital assets by a city. Identify the funds used. Record journal entries for all funds, and label the fund name for each journal entry. a. The city issues general obligation bonds in the amount of $950,000, receiving cash for the full face amount of the bonds. The cash will be used to buy capital assets. b. The county buys a building for $800,000, using part of the bond proceeds. The building is delivered and the invoice for the building is approved. c. The invoice approved in b. is paid. d. The General Fund transfers cash of $65,000 to another fund for the first installment of interest ($40,000) and principal ($25,000) on the debt. e. The first installment of debt service on bonds issued in a. becomes due and payable. f. Debt service on the bonds issued in a. is paid. 4. Prepare journal entries in the Capital Projects Fund (CPF) to record the following transactions related to the construction of a park by the City. a. To finance construction of the park, the City will transfer $2.5 million from its General Fund (GF) and receive a grant of $1.5 million. It appropriates $4 million for construction. b. The GF transfers $2.5 million to the CPF for the new project. c. The state approves the City's application for a $1.5 million grant and sends the funds to the City. The grant requires that the City incur qualifying expenditures. d. The City awards a construction contract in the amount of $3.75 million. e. The contractor sends a progress billing to the City in the amount of $1.75 million. The bill is approved by the City and a voucher is prepared, less a 5% retainage pending completion of the project and final approval. The City considers 30 percent of the billing to be the state's share of the cost. f. The voucher in e., above, is paid. g. The contractor encounters construction problems. Due to these issues, the City authorizes a change order increasing the contract cost by $300,000. h. The contractor completes construction, and sends the City an invoice for the remaining $2 million. The City officials inspect the building and accept the work. The invoice is approved and paid, together with the amount retained on the progress billing in e., above. The City considers $500,000 of the billing to be the state's share of the cost. 5. The Town Debt Service Fund accumulates resources to pay its $3 million debt. The debt is payable in equal annual installments of principal over 20 years with 4% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund. a. The Town levies a property tax amounting to $600,000 to pay debt service on its long-term general government debt. b. All the property taxes levied for debt service are collected. c. The Town invests $200,000 in a nine month CD. d. Debt service (interest of $125,000 and principal of $175,000) becomes due and payable. e. The debt service liabilities are paid. f. The CD in c. matures and the Town receives a total of $207,000. 6. The City establishes an Internal Service Fund (ISF) to account for the costs of photocopying that it will provide to all City departments. Make appropriate ISF journal entries. a. The General Fund (GF) transfers $525,000 to the ISF to start up the operation. b. The ISF uses $500,000 to purchase photocopying equipment, with an 10 year useful life. c. The ISF buys supplies in the amount of $92,000 on account. d. Invoices for the supplies purchased in c., above are paid. e. Employee salaries for the year amounting to $365,000 are paid f. The ISF makes a payment of $43,000 to the Pension Trust Fund for pensions applicable to its employees. g. The ISF receives a rental invoice of $36,000 from the GF. h. The ISF sends invoices to other government departments for services rendered: $52,000 to the GF and $38,000 to the Enterprise Fund. i. The ISF receives payments of $52,000 from the GF and $38,000 from the Enterprise Fund. To prepare its financial statements, the ISF makes adjusting entries to account for the following: j. To record nine month's worth of depreciation on the equipment purchased in b., above. k. To record the expense of supplies consumed during the year. A year-end inventory showed unused supplies amounting to $6,000. (See c., above) l. To record unpaid salaries of $12,500. 7. These transactions relate to a government operated bus service (The \"Bus\"), which provides transportation services to County residents. The Bus is accounted for as a County Enterprise Fund (EF). Make EF journal entries to account for the following 20XX transactions. a. On April 1, the Bus borrows $4,000,000 by issuing 20-year revenue bonds. Bond principal is to be paid back in 40 equal semi-annual installments, starting October 1, as well as 5% a year on the unpaid principal. b. On July 1, The Bus pays cash for 20 buses (estimated useful life of 10 years) costing $100,000 each. The Bus also pays cash for a $950,000 building (estimated useful life of 30 years). c. On July 1, The Bus invests $250,000 in a Certificate of Deposit (CD). d. The Bus pays $52,000 to acquire repair supplies. e. The Bus collects bus fares of $950,000. f. The Bus sends an invoice for $15,000 to a customer. g. The Bus pays employee salaries of $525,000. h. The CD (transaction c.) matures and The Bus receives $260,000. i. On October 1, 20XX, The Bus pays the first installment of principal and interest on the bonds in transaction a. To prepare financial statements at December 31, 20XX, The Bus makes adjusting journal entries for the following items: j. To record depreciation on the buses and building bought in transaction b. k. To record consumption of repair parts. A year-end physical count amounts to $8,500. (See transaction d.) l. To accrue for unpaid salaries of $14,000. m. To accrue interest on the bonds outstanding at December 31, 20XX. (See transactions a. and i.) 8. The Village maintains a Pension Trust Fund (PTF) for its employees. At the start of the year, the Fund has cash of $250,000 and investments that have a fair value of $5,200,000. Prepare the following entries to record them in the PTF. a. Sends invoice to the General Fund (GF) $250,000 for the required annual employer contribution. b. Receives payment of $250,000 from the GF. c. Receives interest of $170,000 in cash on its portfolio. d. Receives $225,000 from selling investments that have a carrying value of $210,000. e. Makes new investments for $265,000. f. Pays annuity benefits of $235,000 to retirees. g. Pays administrative expenses of $130,000. h. The investments held by the PTF have a fair value of $5,500,000 at the end of the fiscal year. 9. A state collects property taxes both for itself and for counties. The state takes several weeks to process property tax receipts and determine how much each participating government should receive, so tax collections are temporarily invested. Resulting investment income is distributed to the state. Prepare entries to record these transactions in the Agency Fund. a. The state collects property taxes totaling $7,500,000 for itself and for the counties. b. The entire $7,500,000 is invested. c. The state calculates that $4,900,000 of the tax collections belong to the state and that $2,600,000 shall be distributed to the counties. d. The investments are immediately liquidated and $7,600,000 is received. e. Tax collections and the investment income are forwarded to the state and the counties. 10. On the following page is the government-wide adjusted trial balance for the Town as of June 30, 20XX, the end of the fiscal year. The adjustments needed to convert accounting information from the current financial resources measurement focus and modified accrual basis of accounting to the economic resources measurement focus and accrual basis of accounting have been made. The Town government performs three functions, general government, public safety and health and sanitation. The Town has no business-type activities nor any component units. Using this information, prepare the government-wide statement of net position (using a classified format), and the government-wide statement of activities as of, and for the year ended, June 30, 20XX. There are no restricted assets or liabilities; the long-term debt is the only debt related to the Town's capital assets. Town Government-Wide Adjusted Trial Balance June 30, 20XX Cash and investments Taxes receivable, net Accounts receivable, net $380,500 380,500 871,000 189,000 Inventories 74,950 Other assets 18,900 Capital assets 20,000,000 Accumulated depreciation, capital assets $10,500,000 Accounts payable 87,500 Deferred revenues 144,000 Current portion of long-term debt 100,000 Noncurrent portion of long-term debt 400,000 Net position 10,000,000 Revenuesproperty taxes 3,650,000 Revenues--other taxes 417,000 Investment revenues 94,500 Miscellaneous revenues 61,350 Program revenuescharges for servicesgeneral government Program revenuescharges for servicespublic safety 350,000 Program revenuespublic safetyoperating grants 275,000 30,000 Program revenueshealth and sanitationcapital grants 1,050,000 General government expenses 1,000,000 Public safety expenses 2,500,000 Health and Sanitation expenses 2,100,000 Interest expense on long-term debt Totals 25,000 25,000 $27,159,350 $27,159,350 Problem 10 - part 1 Town Statement of Net position June 30, 20XX Current assets: Cash and investments Taxes receivable, net Accounts receivable, net Inventories Other assets Total current assets Capital assets, net of accumulated depreciation Total assets Current liabilities: Accounts payable Deferred revenues Current portion of long-term debt Total current liabilities Noncurrent portion of long-term debt Total liabilities Net position Net investment in capital assets Unrestricted Total net position $ $ $ $ $ $ $ 380,500 871,000 189,000 74,950 18,900 1,534,350 9,500,000 $ 11,034,350 $ $ $ $ $ 87,500 144,000 100,000 331,500 400,000 $ $ $ 731,500 9,000,000 1,302,850 $ 10,302,850 Problem 10 - part 2 Functions Expenses General government Public safety Roads and bridges Interest on long-term debt Totals $ $ $ $ $ General revenues Property taxes Other taxes Investment revenues Miscellaneous revenues Total general revenues Change in net position Net position, beginning of year Net position, end of year 1,000,000 2,500,000 2,100,000 25,000 5,625,000 Town Statement of Activities For the Year Ended June 30, 2013 Program Revenues Changes for services $ $ Operating Grants 350,000 30,000 $ Capital Grants 275,000 $ $ 380,000 $ 275,000 $ Net Expenses and Changes in Net Position $ $ 1,050,000 $ $ 1,050,000 $ 650,000 2,195,000 1,050,000 25,000 3,920,000 $ $ $ $ $ $ $ $ 3,650,000 417,000 94,500 61,350 4,222,850 302,850 10,000,000 10,302,850 Problem 10 - part 1 Town Statement of Net position June 30, 20XX Current assets: Cash and investments Taxes receivable, net Accounts receivable, net Inventories Other assets Total current assets Capital assets, net of accumulated depreciation Total assets Current liabilities: Accounts payable Deferred revenues Current portion of long-term debt Total current liabilities Noncurrent portion of long-term debt Total liabilities Net position Net investment in capital assets Unrestricted Total net position $ $ $ $ $ $ $ 380,500 871,000 189,000 74,950 18,900 1,534,350 9,500,000 $ 11,034,350 $ $ $ $ $ 87,500 144,000 100,000 331,500 400,000 $ $ $ 731,500 9,000,000 1,302,850 $ 10,302,850 Problem 10 - part 2 Functions Expenses General government Public safety Roads and bridges Interest on long-term debt Totals $ $ $ $ $ General revenues Property taxes Other taxes Investment revenues Miscellaneous revenues Total general revenues Change in net position Net position, beginning of year Net position, end of year 1,000,000 2,500,000 2,100,000 25,000 5,625,000 Town Statement of Activities For the Year Ended June 30, 2013 Program Revenues Changes for services $ $ Operating Grants 350,000 30,000 $ Capital Grants 275,000 $ $ 380,000 $ 275,000 $ Net Expenses and Changes in Net Position $ $ 1,050,000 $ $ 1,050,000 $ 650,000 2,195,000 1,050,000 25,000 3,920,000 $ $ $ $ $ $ $ $ 3,650,000 417,000 94,500 61,350 4,222,850 302,850 10,000,000 10,302,850