The date is January 1, 2018 and you have been hired by the City of Eagleton as the new chief accountant for the city. Your job is to record the transactions for the citys day-to-day activities and prepare financial statements at the end of the year. The city manager has indicated that the city has consistently obtained a Certificate of Excellence in Financial Reporting issued by the Government Finance Officers Association (GFOA) under the previous accountant and has given you a goal to ensure that the city continues to receive this award. Therefore, your financial statements need to be prepared according to Generally Accepted Accounting Principles (GAAP) as established by the Governmental Accounting Standards Board (GASB).

The Proprietary Funds Statement of Net Position from the previous year is presented below. These beginning balances have already been entered into the proper fund general ledger accounts as of January 1, 2018. The balance in Bonds Payable is the result of an outstanding 20 year serial bond with an original face value $1,250,000 at 10%, the bond calls for annual interest and principal payments on January 1 of each year.

Water Utility Enterprise Fund Transactions :

The City of Eagleton operates a Water Utility Fund, a proprietary fund, to provide water and electricity services to the town residents. Record journal entries for the following transactions in the Water Utility Fund for fiscal year 2018 and post them to the general ledger. Revenues and expenses should be recorded directly to specific revenue and expense accounts as needed. See the proprietary fund general ledger for specific accounts used by the city

Risk Management Internal Service Fund

In an effort to reduce costs and consolidate its risk management activities, the City of Eagleton established the Risk Management Fund as an internal service fund. The purpose of the Risk Management Fund is to obtain liability coverage for the city, pay claims not covered by insurance, and to charge individual departments in amounts sufficient to cover current year costs and to establish a reserve for losses. Record journal entries for the following transactions in the risk management fund for fiscal year 2018. Revenues and expenditures should be recorded directly to specific revenue and expenditure accounts as needed. See the risk management fund general ledger for specific accounts used by the city.

Closing Entries

Use the closing entries tab to prepare the closing entry for each proprietary fund. Do not post the closing entry to the respective funds general ledger. This will allow activity accounts to retain their balances for the period in order to cell reference to the financial statements. You should use the net position t-account on the closing entry tab to determine your ending net position. A table is provided for you to classify your ending net position and to cell reference to the proprietary fund statement of net position. (hint: Restricted Cash should be reported as Restricted Net Position)

Proprietary Fund Financial Statements

Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Position for the proprietary funds of the City of Eagleton for the year ended December 31, 2018.

Prepare a Statement of Net Position for the proprietary funds of the City of Eagleton as of December 31, 2018.

Prepare a Statement of Cash Flows for the proprietary funds of the City of Eagleton for the year ended December 31, 2018. (hint: this statement reconciles the total change in cash, including restricted cash)

Government-wide Financial Statements :

Use a worksheet as illustrated in the text to adjust the governmental funds from Part 1 from modified-accrual accounting to full-accrual accounting basis. On the worksheet, the balances from the Total column on the governmental funds financial statements have already been entered for you and can be used as a check figure for the governmental fund financial statements.

Prepare the following worksheet entries and post to the worksheet. Identify each entry by the appropriate letter below:

Statement of Activities:

Prepare a Government-wide Statement of Activities for the City of Eagleton for the year ended December 31, 2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution from the business-type activities from the Proprietary Fund financial statements above to complete the business activities portion. For purposes of this statement, assume the following:

• The cash grant to the Street & Highway fund from the state (seeEntry SR3) should be entered as Operational Grants and Contributions for Street & Highway Maintenance
• The Education Program Fee Revenues (see Entry GF9) should be entered as Charges for Services for Education.

Statement of Net Position:

Prepare a Statement of Net Position for the City of Eagleton as of December 31, 2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution for the business-type activities from the Proprietary Fund Financial statements above to complete the business activities portion of this statement. Group all capital assets, net of depreciation. The Net Position section should be classified according to GASB standards.

• When calculating Net Investment in Capital Assets for Governmental Activities, dont forget to add back significant unspent bond proceeds.
• Restricted Net Position should equal Restricted Fund Balance from Part 1
• Unrestricted Net Position may be negative after calculating other net position classifications.

Balance Sheet/Statement of Net Position Reconciliation

Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position reported in the government-wide Statement of Net position.

Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities Reconcilation

Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position reported in the government-wide Statement of Activities.

Check Figures: Water Utility Fund -ending Cash balance Water Utility Fund - Unrestricted Net Position Risk Management Fund - ending Cash balance Statement of Revenues, Expenses, and Changes in Fund Net Position - 338,000 353,050 191,250 Water Utility Fund Change in Net Position Risk Management Fund Change in Net 241,850 406,250 Statement of Cash Flows Water Utility Fund Net Cash Provided by Operating Activities Risk Management Fund Net Cash Provided by Operating Activities 394,000 174,500 GW Statement of Activities - Governmental Activities Change in Net Position GW Statement of Net Position - Governmental Activities Unrestricted Net Position 377,250 589,000 City of Eagleton Statement of Net Position Proprietary Funds As of December 31, 2017 Business-Type Activities Water Utility Fund Assets Cash Customer Accounts Receivable (Gross) 94,000 113,200 (9,500) 105,000 23,000 450,000 (75,000) 150,000 (50,000) 650,000 162,500 Less: Allowance for Uncollectible Accounts Due from General Fun Supplies Buildings Less: Accumulated Depreciation Less: Accumulated Depreciation Less: Accumulated Depreciation Equipment Utility Plant Total Assets 1,288,200 Liabilities 72,000 87,500 875,000 1,034,500 Accounts Payable Interest Payable evenue Bonds Payable Total Liabilities Net Position Net Investment in Capital Assets Unrestricted 87,500 166,200 253,700 Total Net Position Total Liabilities and Net Position 1,288.200 Water Utility Enterprise Fund Transactions (Chapter 6): The City of Eagleton operates a Water Utility Fund, a proprietary fund, to provide water and electricity services to the town residents. Record journal entries for the following transactions irn the Water Utility Fund for fiscal year 2018 and post them to the general ledger. Revenues and expenses should be recorded directly to specific revenue and expense accounts as needed. See the proprietary fund general ledger for specific accounts used by the city Entry Reference EF1 The Water Utility Fund collected the balance of $105,000 in Due From Other Funds in cash from the General fund. EF2 On Jan 1, 2018 the Water Utility Fund made a scheduled debt payment on its outstanding bond which included $87,500 of interest accrued in 2017 and $62,500 of bond principal During 2018, the Water Utility Fund billed the city government and residents for electricity and water services in the amounts of $920,000 and $2,120,000 respectively. It is estimated that 2% of the gross revenue from the residents will be uncollectible EF3 EF4 During 2018, $805,000 was collected from the General Fund for utility services billed in EF3. In addition, $2,064,000 was collected from resident accounts receivable and $44,000 was identified as uncollectible and written off EF5 The Water Utililty Fund paid the balance of $72,000 in Accounts Payable with cash. EF6 During the year, the Water Utility Fund placed orders amounting to $725,000 for supplies. The supplies were received with an invoice price of $720,000 S695,000 was paid in cash before year-end. EF7 On April 1, 2018 the Water Utility Fund issued $1,000,000 10% 20 year revenue bond at par for the construction of an addition to the utility plant. The bond calls for annual interest and principal payments beginning on April 1 2019. Proceeds from the bond issuance should be recorded in Restricted Cash" EF8 Salaries and wages in the amount of $1,813,000 were incurred and paid by the EF9 As of December 31, 2018, a physical inventory of supplies on hand reported an EF10 On Dec 31, 2018, the construction of the utility plant addition was completed Water Utility Fund during 2018 amount of $14,000. and a bill was received from the contractor for $1,000,000. The addition should be recorded as "Construction in Progress" since it cannot be put into service until it passes final inspection in January 2019. $950,000 was paid from restricted cash to the contractor with the remaining $50,000 to be held in "Contracts Payable" until the final inspection. EF11 On December 31, 2018, the Water Utility Fund accrued annual interest of $81,250 on its existing debt and $75,000 for 9 months of interest for the bond issued on April 1. EF12 On December 31,2018, the Water Utility Fund recorded depreciation for 2018 using the straight-line method which included S15,000 for buildings, 10,000 for equipment, and 32,500 for the utility plant. Risk Management Internal Service Fund In an effort to reduce costs and consolidate its risk management activities, the City of Eagleton established the Risk Management Fund as an internal service fund. The purpose of the Rislk Management Fund is to obtain liability coverage for the city, pay claims not covered by insurance, and to charge individual departments in amounts sufficient to cover current year costs and to establish a reserve for losses. Record journal entries for the following transactions in the risk management fund for fiscal year 2018. Revenues and expenditures should be recorded directly to specific revenue and expenditure accounts as needed. See the risk management fund general ledger for specific accounts used by the city Entry Reference ISF1 A transfer of S600,000 was received from the general fund to establish the Risk Management Fund. Insurance coverage (prepaid) was purchased for $250,000. The policy requires that the city self-insure for up to $25,000 per incident. Office equipment was purchased for $25,000. $225,000 was invested in marketable securities. Actuarial estimates were made to determine the amounts necessary to cover current year costs and establish a reserve. As a result, the Risk Management Fund billed and collected $255,000 year from the General Fund during the year ISF2 ISF3 ISF4 ISF5 ISF6 Interest and dividends received totaled $15,750 ISF7 Salaries of $95,000 were paid during the year. ISF8 Claims paid under self-insurance totaled $84,500 during the year ISF9 The office equipment was depreciated for the year for $5,000 ISF10 At year-end, $210,000 of the insurance policies purchased earlier in the year had expired. This was charged to Contracted Services. ISF11 The market value of investments at December 31,2018 totaled $231,000. ISF12 In addition to claims paid in ISF5, estimates for the liability for the city's portion of known claims totaled $76,000. Government-wide Financial Statements (Chapter 8): Use a worksheet as illustrated in the text to adjust the governmental funds from Part 1 from modified-accrual accounting to full-accrual accounting basis. On the worksheet, the balances from the "Total" column on the governmental funds financial statements have already been entered for you and can be used as a check figure for the governmental fund financial statements. Prepare the following worksheet entries and post to the worksheet. Identify each entry by the appropriate letter below: Worksheet Entries: The City of Eagleton began the year with capital assets that had an original cost of $1,875,000 and accumulated depreciation of S314,000 Eliminate the Capital Expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance. A. C.Depreciation for 2018 on existing capital assets is $78,500. Because the new school building in the capital project fund is not yet complete it will not be depreciated for 2018 D. On January 1, 2018, the City of Eagleton had outstanding bond payable of $1,500,000 E.Eliminate the Other Financing Sources: Proceeds from Bond Issuance (don't forget the bond premium) shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance. F. Eliminate expenditures for Debt Service: Bond Principle shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance G. Accrue nine months of interest for the bond that was issued on April 1, 2018 (see Entry CPI) H. Record amortization for the bond premium received from the April 1, 2018 bond issuance using the straight-line method (9 months) I. Eliminate the current year recognition of the prior year deferred inflow for property taxes (see Entry GF3) J.Adjust the current year deferred inflow for property taxes to recognize revenue in the current year (see Entry GF16) K.Include the Risk Management Fund with the governmental activities by adding the balances from the Proprietary Funds Statement of Net Position prepared above to the combining worksheet. Combine all capital assets for the Risk Management Fund into one account, do the same for any accumulated depreciation accounts (the conversion worksheet has a separate set ofcolumns available for entries related to internal service funds). L. Adjust the governmental fund expenditures for the operating loss reported by the Risk Management Fund, 40% of the loss is attributable to general government operations, 30% to public safety, and 30% to education. M. Adjust the governmental fund revenues for the investment income (revenue N. Add the Risk Management Fund's Transfer In from the General Fund (see O Eliminate transfers between governmental activities. earned from 3rd parties) reported by the Risk Management Fund. Entries GF6 & ISFI). Statement of Activities: Prepare a Government-wide Statement of Activities for the City of Eagleton for the year ended December 31,2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution from the business- type activities from the Proprietary Fund financial statements above to complete the business activities portion. For purposes of this statement, assume the following: .The cash grant to the Street & Highway fund from the state (see Entry SR3) should be entered as "Operational Grants and Contributions" for Street & Highway Maintenance The Education Program Fee Revenues (see Entry GF9) should be entered as Charges for Services" for Education. . Statement of Net Position: Prepare a Statement of Net Position for the City of Eagleton as of December 31, 2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution for the business-type activities from the Proprietary Fund Financial statements above to complete the business activities portion of this statement. Group all capital assets, net of depreciation. The Net Position section should be classified according to GASB standards When calculating "Net Investment in Capital Assets" for Governmental Activities, don't forget to add back significant unspent bond proceeds . e Restricted Net Position should equal Restricted Fund Balance from Part 1 * Unrestricted Net Position may be negative after calculating other net position classifications Balance Sheet/Statement of Net Position Reconciliation Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position reported in the government-wide Statement of Net position Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities Reconcilatin Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position reported in the government-wide Statement of Activities. Proprietary Funds Water Utility Enterprise Fund Risk Management Internal Service Fund Closing Entries Proprietary Fupopricay Fnds- Staemnt of rt Potti Fund Financial Statements Proprietary Funds-Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds - Statement of Net Position Proprietary Funds -Statement of Cash Flows Government-wide Financial Statements Conversion Worksheet Statement of Activities Statement of Net Position Govermmental Funds Reconciliations Risk Management Internal Service Fund General Ledger Financial Statement Accounts General Journal reference Account Titles Debits Credits VES I MENI PREPAIDINSURA DRPR EQLIPMENT NET POSTT INVESIML CHARGESH IRANSKERS IN SALARIES EXPENSE CONTRACTUAL SERVICES INSURANCE CLAIMS DE PRECIA rLON EXPENSE 101 TOTALS CREDITS CHECK TOTALS Water Utility Enterprise Fund Account Names Closing Entry Debit Credit Water Utility Fund Net Position 253,700 Balance from "EF" tab Closing Entry 253,700 Ending Net Position These should equal Net Investment in Capital Assets Restricted Unrestricted Total Step 1 Net Investment in Capital Assets Capital Assets Less: Accumulated Depreciation Less: Revenue Bonds Payable Plus: Unspent Bond Proceeds Less: Contracts Payable Step 2 Restricted Step 3 Unrestricted (plug) Cell reference these to the "Net Position" section of the balance sheet Risk Management Internal Service Fund-Closing Entry Account Names Debit Credit Risk Management Fund Net Position Balance from "ISF" tab Closing Entry Ending Net Position - Net Investment in Capital Assets Restricted Unrestricted Total Step 1 Net Investment in Capital Assets Capital Assets Less: Accumulated Depreciation Step 2 Restricted Step 3 Unrestricted (plug) Citylof Eagleton Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended December 31,2018 Business-Type Activities Water Utility Fund Governmental Activities isk Management Fund Operating Revenues Charges for Services Total Operating Revenues Operating Expenses Salaries Supplies Contractual Services Insurance Claims Depreciation Total Operating Expenses Opert Nonoperating Reven u es/(Expenses) Investment Income Interest Expense ing Income (Loss) Total Nonoperating Revenues (Expenses) Income before Contributions & Transfers Transfers In Change in Net Position 253,700 253,700 Net Position, January 1 Net Position, December 31 City of Eagleton Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended December 31,2018 Business-Type Activities Water Utility Fund Governmental Activities Risk Management Fund Cash Flows from Operating Activities Cash received from customers Cash paid for supplies Cash paid to employees Cash paid for contractual servicese Cash paid for insurance claims Net Cash Provided by Operating Activities Cash Flows from Non-Capital Related Financing Activities Net Cash Provided by Non-Capital Re lated Financing Activities Cash Flows from Capital Related Financing Activities Transfer from general fund Transfer from genreral fund Proceeds from issuance of long-term debt Acquisition and construction of capital assets Payment on long-term debt principal Interest paid on long-term debt Net Cash Used in Capital Related Financing Activities Cash Flows from Investing Activities Purchase of investments Interest and dividends received Net Cash Provided from Investing Activities Net Increase in Cash Cash and Cash Equivalents, January 1, 2017 Cash and Cash Equivalents, December 31, 2017 94,000 94,000 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income Adjustments Depreciation (Increase) Decrease in Customer Accounts Receivable- net (Increase)Decrease in Interfund Receivables (Increase) Decrease in Supplies (Increase) Decrease in Prepaid Insurance Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Net Cash Provided by Operating Activities Noncash Investing, Capital and Non-capital Related Financing Activities Acquisition of building through contracts payable These balances come from Project Part 1 governmental funds statements Total Column" (Correct Version) Enter all amounts as positive numbers. The worksheet is formatted to add debits to asscts & expenses and add credits to revenues, liabilities &equity Gov'tal Fund Balances (from Part 1) Gov'tal Fund Balances (adjusted) Balances for Gov't-wide Stmts Credits Adjustments& Eliminations Internal Service Funds Debits Credits Capilal Asets 605,000 605,000 Other Expenditures (expense Debt Service Fr Interest( 150,000 150,000 150,000 Other Fin. Uses Transfers Out Total Debits ccounts Payable ecrued Interest Bonds Payable 0,000 rational Crants Other Finacing Sources ransfers In Net Position at beginning of year Total Crodits CHECK TOTALS FOR JE'S Check Totals City of Eagleton Government-wide Financial Statements Statement of Activities For the Fiscal Year Ended December 31, 201:8 Program Revenues Net (Expense) Revenue and Change in Net Positiorn Operational Charges forGrants and Grants and Capital Governmenta Business-Ty Activitics Expenses Scrvices Contributions Contributions Activities Total Functions/Programs Governmental Activities: General Government Public Saf Education Street & Highway Maitenance Interest Depreciation Total Governmental Activities Business Type Activities Public Works Authority Total Government General Revenues Taxes: Property Taxes Sales Taxes Fees, Licenses and Permits Investment Income Total General Revenues Change in Net Position Net Position, Beginning Net Position, Ending 86,000 86,000S 253,700 253,700S$ 339,700 339,700 City of Eagleton Government-wide Financial Statements Statement of Net Position As of December 31, 2018 Governmental Activities Business-Type Activities Total Assets Cash Investments Accounts Receivable (Net) Taxes Receivable (Net) Internal Balances Current Due from Other Governments Supplies Invento Prepaid Insurance Restricted Cash Capital Assets, Net of Accumulated Depreciation Total Assets Liabilities Accounts Payable Contracts Pavable Accrued Interest Payable Accrued Liabilities Bonds Payable Premium on Bonds Sold Total Liabilities Net Position Net Investment in Capital Assets Restricted Unrestricted Total Net Position Total Liabilities and Net Position City of Eagleton Government-wide Financial Statements Statement of Net Position As of December 31, 2018 Governmental Activities Business-Type Activities Total Assets Cash Investments Accounts Receivable (Net) Taxes Receivable (Net) Internal Balances Current Duc from Other Giovernments Supplies Inventory Prepaid Insurance Restrictad Cash Capital Assets, Net of Accumulated Depreciation Enter "Due from Other Funds" as positive and "Due to Other Funds" as negative Total Assets Liabilitics Accounts Payable Contracts Payable Accrued Interest Payable Accrucd Liahilitics Bonds Payable Premium on Bonds Sold Total Liabilities Net Position Net Investment in Capital Assets Restrictod Unrestricted Total Net Position Total Liabilities and Net Position CITY OF EAGLETON Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position As of December 31, 2018 Fund balances reported in governmental funds Balance Sheet Amounts reported for governmental activities in the S1,581,250 Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of internal service funds are included in governmental funds in the Statement of Net Position Accrued interest payable is not due and payable in the current period and therefore not reported in the funds. Bonds payable, not due and payable in the current period are not reported in the funds. Deferred revenue for property taxes is reported in the funds but accrued as revenue in the government-wide statements and added to net position Net Position of Governmental Activities 1,581,250 CITY OF EAGLETON Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the year ended December 31,2018 S1,495,250 Net change in fund balances - Governmental funds Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds report capital outlays as expenditures rather than assets Governmental funds do not report depreciation expense Net effect of revenues reported on the accrual basis in the Statement of Activities that do not provide current financial resources and thus are not reported as revenues in the funds until available Bond proceeds are reported as other financing sources in the governmental funds but as liabilities in the government-wide statements Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. The net revenue (expense) of the internal service fund is reported with governmental activities Repayment of bonds is reported as an expenditure in the governmental funds Interest is not accrued at year end in the governmental funds Change in Net Position of Governmental Activities 1,495,250 Check Figures: Water Utility Fund -ending Cash balance Water Utility Fund - Unrestricted Net Position Risk Management Fund - ending Cash balance Statement of Revenues, Expenses, and Changes in Fund Net Position - 338,000 353,050 191,250 Water Utility Fund Change in Net Position Risk Management Fund Change in Net 241,850 406,250 Statement of Cash Flows Water Utility Fund Net Cash Provided by Operating Activities Risk Management Fund Net Cash Provided by Operating Activities 394,000 174,500 GW Statement of Activities - Governmental Activities Change in Net Position GW Statement of Net Position - Governmental Activities Unrestricted Net Position 377,250 589,000 City of Eagleton Statement of Net Position Proprietary Funds As of December 31, 2017 Business-Type Activities Water Utility Fund Assets Cash Customer Accounts Receivable (Gross) 94,000 113,200 (9,500) 105,000 23,000 450,000 (75,000) 150,000 (50,000) 650,000 162,500 Less: Allowance for Uncollectible Accounts Due from General Fun Supplies Buildings Less: Accumulated Depreciation Less: Accumulated Depreciation Less: Accumulated Depreciation Equipment Utility Plant Total Assets 1,288,200 Liabilities 72,000 87,500 875,000 1,034,500 Accounts Payable Interest Payable evenue Bonds Payable Total Liabilities Net Position Net Investment in Capital Assets Unrestricted 87,500 166,200 253,700 Total Net Position Total Liabilities and Net Position 1,288.200 Water Utility Enterprise Fund Transactions (Chapter 6): The City of Eagleton operates a Water Utility Fund, a proprietary fund, to provide water and electricity services to the town residents. Record journal entries for the following transactions irn the Water Utility Fund for fiscal year 2018 and post them to the general ledger. Revenues and expenses should be recorded directly to specific revenue and expense accounts as needed. See the proprietary fund general ledger for specific accounts used by the city Entry Reference EF1 The Water Utility Fund collected the balance of $105,000 in Due From Other Funds in cash from the General fund. EF2 On Jan 1, 2018 the Water Utility Fund made a scheduled debt payment on its outstanding bond which included $87,500 of interest accrued in 2017 and $62,500 of bond principal During 2018, the Water Utility Fund billed the city government and residents for electricity and water services in the amounts of $920,000 and $2,120,000 respectively. It is estimated that 2% of the gross revenue from the residents will be uncollectible EF3 EF4 During 2018, $805,000 was collected from the General Fund for utility services billed in EF3. In addition, $2,064,000 was collected from resident accounts receivable and $44,000 was identified as uncollectible and written off EF5 The Water Utililty Fund paid the balance of $72,000 in Accounts Payable with cash. EF6 During the year, the Water Utility Fund placed orders amounting to $725,000 for supplies. The supplies were received with an invoice price of $720,000 S695,000 was paid in cash before year-end. EF7 On April 1, 2018 the Water Utility Fund issued $1,000,000 10% 20 year revenue bond at par for the construction of an addition to the utility plant. The bond calls for annual interest and principal payments beginning on April 1 2019. Proceeds from the bond issuance should be recorded in Restricted Cash" EF8 Salaries and wages in the amount of $1,813,000 were incurred and paid by the EF9 As of December 31, 2018, a physical inventory of supplies on hand reported an EF10 On Dec 31, 2018, the construction of the utility plant addition was completed Water Utility Fund during 2018 amount of $14,000. and a bill was received from the contractor for $1,000,000. The addition should be recorded as "Construction in Progress" since it cannot be put into service until it passes final inspection in January 2019. $950,000 was paid from restricted cash to the contractor with the remaining $50,000 to be held in "Contracts Payable" until the final inspection. EF11 On December 31, 2018, the Water Utility Fund accrued annual interest of $81,250 on its existing debt and $75,000 for 9 months of interest for the bond issued on April 1. EF12 On December 31,2018, the Water Utility Fund recorded depreciation for 2018 using the straight-line method which included S15,000 for buildings, 10,000 for equipment, and 32,500 for the utility plant. Risk Management Internal Service Fund In an effort to reduce costs and consolidate its risk management activities, the City of Eagleton established the Risk Management Fund as an internal service fund. The purpose of the Rislk Management Fund is to obtain liability coverage for the city, pay claims not covered by insurance, and to charge individual departments in amounts sufficient to cover current year costs and to establish a reserve for losses. Record journal entries for the following transactions in the risk management fund for fiscal year 2018. Revenues and expenditures should be recorded directly to specific revenue and expenditure accounts as needed. See the risk management fund general ledger for specific accounts used by the city Entry Reference ISF1 A transfer of S600,000 was received from the general fund to establish the Risk Management Fund. Insurance coverage (prepaid) was purchased for $250,000. The policy requires that the city self-insure for up to $25,000 per incident. Office equipment was purchased for $25,000. $225,000 was invested in marketable securities. Actuarial estimates were made to determine the amounts necessary to cover current year costs and establish a reserve. As a result, the Risk Management Fund billed and collected $255,000 year from the General Fund during the year ISF2 ISF3 ISF4 ISF5 ISF6 Interest and dividends received totaled $15,750 ISF7 Salaries of $95,000 were paid during the year. ISF8 Claims paid under self-insurance totaled $84,500 during the year ISF9 The office equipment was depreciated for the year for $5,000 ISF10 At year-end, $210,000 of the insurance policies purchased earlier in the year had expired. This was charged to Contracted Services. ISF11 The market value of investments at December 31,2018 totaled $231,000. ISF12 In addition to claims paid in ISF5, estimates for the liability for the city's portion of known claims totaled $76,000. Government-wide Financial Statements (Chapter 8): Use a worksheet as illustrated in the text to adjust the governmental funds from Part 1 from modified-accrual accounting to full-accrual accounting basis. On the worksheet, the balances from the "Total" column on the governmental funds financial statements have already been entered for you and can be used as a check figure for the governmental fund financial statements. Prepare the following worksheet entries and post to the worksheet. Identify each entry by the appropriate letter below: Worksheet Entries: The City of Eagleton began the year with capital assets that had an original cost of $1,875,000 and accumulated depreciation of S314,000 Eliminate the Capital Expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance. A. C.Depreciation for 2018 on existing capital assets is $78,500. Because the new school building in the capital project fund is not yet complete it will not be depreciated for 2018 D. On January 1, 2018, the City of Eagleton had outstanding bond payable of $1,500,000 E.Eliminate the Other Financing Sources: Proceeds from Bond Issuance (don't forget the bond premium) shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance. F. Eliminate expenditures for Debt Service: Bond Principle shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance G. Accrue nine months of interest for the bond that was issued on April 1, 2018 (see Entry CPI) H. Record amortization for the bond premium received from the April 1, 2018 bond issuance using the straight-line method (9 months) I. Eliminate the current year recognition of the prior year deferred inflow for property taxes (see Entry GF3) J.Adjust the current year deferred inflow for property taxes to recognize revenue in the current year (see Entry GF16) K.Include the Risk Management Fund with the governmental activities by adding the balances from the Proprietary Funds Statement of Net Position prepared above to the combining worksheet. Combine all capital assets for the Risk Management Fund into one account, do the same for any accumulated depreciation accounts (the conversion worksheet has a separate set ofcolumns available for entries related to internal service funds). L. Adjust the governmental fund expenditures for the operating loss reported by the Risk Management Fund, 40% of the loss is attributable to general government operations, 30% to public safety, and 30% to education. M. Adjust the governmental fund revenues for the investment income (revenue N. Add the Risk Management Fund's Transfer In from the General Fund (see O Eliminate transfers between governmental activities. earned from 3rd parties) reported by the Risk Management Fund. Entries GF6 & ISFI). Statement of Activities: Prepare a Government-wide Statement of Activities for the City of Eagleton for the year ended December 31,2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution from the business- type activities from the Proprietary Fund financial statements above to complete the business activities portion. For purposes of this statement, assume the following: .The cash grant to the Street & Highway fund from the state (see Entry SR3) should be entered as "Operational Grants and Contributions" for Street & Highway Maintenance The Education Program Fee Revenues (see Entry GF9) should be entered as Charges for Services" for Education. . Statement of Net Position: Prepare a Statement of Net Position for the City of Eagleton as of December 31, 2018. Use the balances computed from the conversion worksheet for the governmental activities portion of this statement. Use your solution for the business-type activities from the Proprietary Fund Financial statements above to complete the business activities portion of this statement. Group all capital assets, net of depreciation. The Net Position section should be classified according to GASB standards When calculating "Net Investment in Capital Assets" for Governmental Activities, don't forget to add back significant unspent bond proceeds . e Restricted Net Position should equal Restricted Fund Balance from Part 1 * Unrestricted Net Position may be negative after calculating other net position classifications Balance Sheet/Statement of Net Position Reconciliation Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position reported in the government-wide Statement of Net position Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities Reconcilatin Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position reported in the government-wide Statement of Activities. Proprietary Funds Water Utility Enterprise Fund Risk Management Internal Service Fund Closing Entries Proprietary Fupopricay Fnds- Staemnt of rt Potti Fund Financial Statements Proprietary Funds-Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds - Statement of Net Position Proprietary Funds -Statement of Cash Flows Government-wide Financial Statements Conversion Worksheet Statement of Activities Statement of Net Position Govermmental Funds Reconciliations Risk Management Internal Service Fund General Ledger Financial Statement Accounts General Journal reference Account Titles Debits Credits VES I MENI PREPAIDINSURA DRPR EQLIPMENT NET POSTT INVESIML CHARGESH IRANSKERS IN SALARIES EXPENSE CONTRACTUAL SERVICES INSURANCE CLAIMS DE PRECIA rLON EXPENSE 101 TOTALS CREDITS CHECK TOTALS Water Utility Enterprise Fund Account Names Closing Entry Debit Credit Water Utility Fund Net Position 253,700 Balance from "EF" tab Closing Entry 253,700 Ending Net Position These should equal Net Investment in Capital Assets Restricted Unrestricted Total Step 1 Net Investment in Capital Assets Capital Assets Less: Accumulated Depreciation Less: Revenue Bonds Payable Plus: Unspent Bond Proceeds Less: Contracts Payable Step 2 Restricted Step 3 Unrestricted (plug) Cell reference these to the "Net Position" section of the balance sheet Risk Management Internal Service Fund-Closing Entry Account Names Debit Credit Risk Management Fund Net Position Balance from "ISF" tab Closing Entry Ending Net Position - Net Investment in Capital Assets Restricted Unrestricted Total Step 1 Net Investment in Capital Assets Capital Assets Less: Accumulated Depreciation Step 2 Restricted Step 3 Unrestricted (plug) Citylof Eagleton Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended December 31,2018 Business-Type Activities Water Utility Fund Governmental Activities isk Management Fund Operating Revenues Charges for Services Total Operating Revenues Operating Expenses Salaries Supplies Contractual Services Insurance Claims Depreciation Total Operating Expenses Opert Nonoperating Reven u es/(Expenses) Investment Income Interest Expense ing Income (Loss) Total Nonoperating Revenues (Expenses) Income before Contributions & Transfers Transfers In Change in Net Position 253,700 253,700 Net Position, January 1 Net Position, December 31 City of Eagleton Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended December 31,2018 Business-Type Activities Water Utility Fund Governmental Activities Risk Management Fund Cash Flows from Operating Activities Cash received from customers Cash paid for supplies Cash paid to employees Cash paid for contractual servicese Cash paid for insurance claims Net Cash Provided by Operating Activities Cash Flows from Non-Capital Related Financing Activities Net Cash Provided by Non-Capital Re lated Financing Activities Cash Flows from Capital Related Financing Activities Transfer from general fund Transfer from genreral fund Proceeds from issuance of long-term debt Acquisition and construction of capital assets Payment on long-term debt principal Interest paid on long-term debt Net Cash Used in Capital Related Financing Activities Cash Flows from Investing Activities Purchase of investments Interest and dividends received Net Cash Provided from Investing Activities Net Increase in Cash Cash and Cash Equivalents, January 1, 2017 Cash and Cash Equivalents, December 31, 2017 94,000 94,000 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income Adjustments Depreciation (Increase) Decrease in Customer Accounts Receivable- net (Increase)Decrease in Interfund Receivables (Increase) Decrease in Supplies (Increase) Decrease in Prepaid Insurance Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Net Cash Provided by Operating Activities Noncash Investing, Capital and Non-capital Related Financing Activities Acquisition of building through contracts payable These balances come from Project Part 1 governmental funds statements Total Column" (Correct Version) Enter all amounts as positive numbers. The worksheet is formatted to add debits to asscts & expenses and add credits to revenues, liabilities &equity Gov'tal Fund Balances (from Part 1) Gov'tal Fund Balances (adjusted) Balances for Gov't-wide Stmts Credits Adjustments& Eliminations Internal Service Funds Debits Credits Capilal Asets 605,000 605,000 Other Expenditures (expense Debt Service Fr Interest( 150,000 150,000 150,000 Other Fin. Uses Transfers Out Total Debits ccounts Payable ecrued Interest Bonds Payable 0,000 rational Crants Other Finacing Sources ransfers In Net Position at beginning of year Total Crodits CHECK TOTALS FOR JE'S Check Totals City of Eagleton Government-wide Financial Statements Statement of Activities For the Fiscal Year Ended December 31, 201:8 Program Revenues Net (Expense) Revenue and Change in Net Positiorn Operational Charges forGrants and Grants and Capital Governmenta Business-Ty Activitics Expenses Scrvices Contributions Contributions Activities Total Functions/Programs Governmental Activities: General Government Public Saf Education Street & Highway Maitenance Interest Depreciation Total Governmental Activities Business Type Activities Public Works Authority Total Government General Revenues Taxes: Property Taxes Sales Taxes Fees, Licenses and Permits Investment Income Total General Revenues Change in Net Position Net Position, Beginning Net Position, Ending 86,000 86,000S 253,700 253,700S$ 339,700 339,700 City of Eagleton Government-wide Financial Statements Statement of Net Position As of December 31, 2018 Governmental Activities Business-Type Activities Total Assets Cash Investments Accounts Receivable (Net) Taxes Receivable (Net) Internal Balances Current Due from Other Governments Supplies Invento Prepaid Insurance Restricted Cash Capital Assets, Net of Accumulated Depreciation Total Assets Liabilities Accounts Payable Contracts Pavable Accrued Interest Payable Accrued Liabilities Bonds Payable Premium on Bonds Sold Total Liabilities Net Position Net Investment in Capital Assets Restricted Unrestricted Total Net Position Total Liabilities and Net Position City of Eagleton Government-wide Financial Statements Statement of Net Position As of December 31, 2018 Governmental Activities Business-Type Activities Total Assets Cash Investments Accounts Receivable (Net) Taxes Receivable (Net) Internal Balances Current Duc from Other Giovernments Supplies Inventory Prepaid Insurance Restrictad Cash Capital Assets, Net of Accumulated Depreciation Enter "Due from Other Funds" as positive and "Due to Other Funds" as negative Total Assets Liabilitics Accounts Payable Contracts Payable Accrued Interest Payable Accrucd Liahilitics Bonds Payable Premium on Bonds Sold Total Liabilities Net Position Net Investment in Capital Assets Restrictod Unrestricted Total Net Position Total Liabilities and Net Position CITY OF EAGLETON Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position As of December 31, 2018 Fund balances reported in governmental funds Balance Sheet Amounts reported for governmental activities in the S1,581,250 Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of internal service funds are included in governmental funds in the Statement of Net Position Accrued interest payable is not due and payable in the current period and therefore not reported in the funds. Bonds payable, not due and payable in the current period are not reported in the funds. Deferred revenue for property taxes is reported in the funds but accrued as revenue in the government-wide statements and added to net position Net Position of Governmental Activities 1,581,250 CITY OF EAGLETON Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the year ended December 31,2018 S1,495,250 Net change in fund balances - Governmental funds Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds report capital outlays as expenditures rather than assets Governmental funds do not report depreciation expense Net effect of revenues reported on the accrual basis in the Statement of Activities that do not provide current financial resources and thus are not reported as revenues in the funds until available Bond proceeds are reported as other financing sources in the governmental funds but as liabilities in the government-wide statements Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. The net revenue (expense) of the internal service fund is reported with governmental activities Repayment of bonds is reported as an expenditure in the governmental funds Interest is not accrued at year end in the governmental funds Change in Net Position of Governmental Activities 1,495,250