Your write-up should be at least one page, no longer than two pages. Your write-up is a lessons learned. What did you learn as you completed this project? Did certain relationships and/or concepts become more apparent? What parts were easy and/or difficult?

Chapter 5 - Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent 5-C. Part 1. Capital Projects Fund Transactions The voters of the City of Everlasting Sunshine approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new annex to the City Hall. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $500,000 grant was expected from the state government. Required: a. Open a general journal for the City Hall Annex Construction Fund. Record the following transactions and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2012, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $50,000 premium. The bonds are to mature in blocks of $200,000 each year over a 20-year period commencing January 1, 2013. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2012. The premium was transferred to the City Hall Annex Debt Service Fund for the future payment of principal on the bonds. (2) The receivable from the state government was recorded. (3) Legal and engineering fees early in the project were paid in the amount of $53,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $210,000. (5) Preliminary plans were approved, and the architects were paid 20 percent of the fee. (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $126,000 to the architects was approved and paid. (7) Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $3,800,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $2,000,000. Payment was approved and vouchered with the exception of a 5 percent retainage. (9) Cash in the full amount of the grant was received from the state government. (10) Furniture and equipment for the annex were ordered at a total cost of $410,000. (11) Payment was made to the contractor for the amount vouchered (see 8 above). (12) The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was vouchered and paid. (13) Furniture and equipment were received at a total actual installed cost of $405,550. Invoices were approved for payment. (14) The remainder of the architects' fees was approved for payment. (15) The City Hall Annex Construction Fund paid all outstanding liabilities on December 31, 2012. The remaining cash was transferred to the City Hall Annex Debt Service Fund. b. Post the entries to the City Hall Annex Construction Fund general ledger. c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 2. Existing Debt Service Fund Transactions The City Hall Debt Service Fund of the City of Everlasting Sunshine has been open for five years; it was created to service an $8,000,000, 6 percent tax-supported bond issue. As of December 31, 2011, this serial bond issue had a balance of $6,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2012, were Cash with Fiscal Agent and Fund BalanceAssigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2011 in order to be able to pay bond principal and interest due on January 1, 2012.) The government chose not to accrue interest payable. Required: a. Open a general journal for the City Hall Debt Service Fund and prepare journal entries for the following transactions. Control accounts are not necessary (1) The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. (2) Cash in the amount of $168,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day. (4) Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal payments due on January 1, 2012. The government elected to not accrue the interest or principal at year-end. b. Post the entries to the City Hall Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 3. New Debt Service Fund Transactions On the advice of the city attorney, a City Hall Annex Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2012 (see Part 1). Required: a. Open a general journal for the City Hall Annex Debt Service Fund. Record the following transactions, as necessary. Control accounts are not necessary (1) The premium described in transaction 1 of Part 1 was received as a transfer from the capital projects fund. (2) Cash in the amount of $160,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day. (4) The transfer described in part c of Part 1 was received. (5) Cash in the amount of $360,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for interest and principal payments due on January 1, 2010. The remaining cash on hand was invested. The government elected to not accrue the interest at year-end. b. Post the entries to the City Hall Annex Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. Assume any remaining net resources are classified as Fund Balance - Assigned for Debt Service. 5-C. Part 4. Governmental Funds Financial Statements Required: a. Prepare a Balance Sheet for the governmental funds for the City of Everlasting Sunshine as of December 31, 2012. Include the General Fund, the Street and Highway Fund (P4-C), the City Hall Debt Service Fund, and the City Hall Annex Debt Service Fund. Use the balances computed in 4-C for the General Fund and special revenue fund portions of this statement. b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the governmental funds for the City of Everlasting Sunshine for the Year Ended December 31, 2012. Include the same funds as listed in requirement a plus the City Hall Annex Construction Fund. Chapter 6 - Proprietary Funds 6-C. Part 1. Internal Service Fund Transactions The Stores and Service Fund of the City of Everlasting Sunshine had the following account balances as of January 1, 2012: Debits Credits Cash $12,000 Due from other funds 25,000 Inventory of supplies 50,000 Land 15,000 Buildings 44,000 Accumulated depreciationbuildings $11,000 Equipment 21,000 Accumulated depreciationequipment 10,500 Accounts payable 7,500 Advance from water utility fund 30,000 Net assets 108,000 Totals $167,000 $167,000 Required: a. Open a general journal for the City of Everlasting Sunshine Stores and Service Fund and record the following transactions. (1) A budget was prepared for FY 2012. It was estimated that the price charged other departments for supplies should be 1.16% of cost to achieve the desired breakeven for the year. (2) The amount due from other funds as of January 1, 2012, was collected in full. (3) During the year, supplies were ordered and received in the amount of $285,000. This amount was vouchered. (4) $10,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged. (5) During the year, supplies costing $270,000 were issued to the General Fund, and supplies costing $50,000 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup (1 above). (6) Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $10,100; Warehousing, $15,300; Delivery, $13,200; and Administrative, $7,300. (7) Cash was received from the General Fund in the amount of $300,000 and from the Water Utility Fund in the amount of $50,000. (8) Accounts payable were paid in the amount of $330,000. (9) Depreciation in the amount of $2,200 was recorded for buildings and $2,100 for equipment. b. Post the entries to the Stores and Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming there are no Restricted Net Assets. 6-C. Part 2. Enterprise Fund Transactions The City of Everlasting Sunshine maintains a Water and Sewer Fund to provide utility services to its citizens. As of January 1, 2012, the City of Everlasting Sunshine Water and Sewer Fund had the following account balances: Debits Credits Cash $111,200 Customer Accounts Receivable 113,000 Estimated Uncollectible Accounts Receivable $2,260 Materials and Supplies 72,400 Advance to Stores and Services Fund 30,000 Restricted Assets 135,000 Utility Plant in Service 4,135,200 Construction Work in Progress 215,000 Accumulated Depreciation - Utility Plant 692,600 Accounts Payable 116,000 Revenue Bonds Payable 2,300,000 Net Assets 1,700,940 Totals $4,811,800 $4,811,800 Required: a. Open a general journal for the City of Everlasting Sunshine Water and Sewer Utility Fund and record the following transactions. (1) During the year, sales of water to nonmunicipal customers amounted to $910,600, and sales of water to the General Fund amounted to $45,000. (2) Collections from nonmunicipal customers amounted to $875,000. (3) The Stores and Services Fund repaid $10,000 of the long-term advance to the Water and Sewer Fund. (4) Materials and supplies in the amount of $270,000 were received. A liability in that amount was recorded. (5) Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $135,000; selling, $15,000; administration, $64,000; construction work in progress, $59,000. (6) Payroll costs for the year totaled $416,200. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. In addition, taxes that are expenses of the utility amounted to $34,200. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $240,800; sales, $24,900; administration, $91,400; construction work in progress, $93,300. (7) Bond interest in the amount of $184,000 was paid. (8) Interest in the amount of $13,100 (included in 7 above) was reclassified to Construction Work in Progress. (9) Construction projects were completed in the amount of $250,000, and the assets were placed in service. Payment was not yet made. (10) Collection efforts were discontinued on bills totaling $1,560. The unpaid receivables were written off. (11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $4,160. (12) Payment of accounts payable amounted to $217,000. Payments of payroll taxes totaled $95,200. (13) Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies. (14) Depreciation expense for the year was computed to be $210,000. (15) In accord with the revenue bond indenture, $15,000 cash was transferred from operating cash to restricted assets. b. Post the entries to the Water and Sewer Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets. 6-C. Part 3. Proprietary Fund Financial Statements Required: Prepare, in good form, for the proprietary funds accounted for in Parts 1 and 2, the following: (1) A Statement of Revenues, Expenses, and Changes in Fund Net Assets for the Year Ended December 31, 2012. (2) A Statement of Net Assets, as of December 31, 2012. Net the amounts due to and due from the General Fund. (3) A Statement of Cash Flows for the Year Ended December 31, 2012. Include restricted assets as a part of cash and cash equivalents for this statement. Chapter 7 - Fiduciary (Trust) Funds 7-C. Part 1. Private Purpose Trust Fund Transactions The City of Everlasting Sunshine Community Foundation private-purpose trust fund had the following account balances on January 1, 2012: Debits Credits Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 Accrued Interest Receivable . . . . . . . . . . . . . . . . . . 13,333 Investments in MNO Company Bonds . . . . . . . . . . 1,000,000 Net Assets Held in Trust .................. . . . . . . . . . $1,048,333 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,048,333 $1,048,333 Required: a. Open a general journal for the City of Everlasting Sunshine Community Foundation Trust Fund and record the following transactions for the year ending December 31, 2012: (1) On May 1, the first semiannual interest payment was received on the MNO Company bonds. The bonds pay 8 percent annual interest, semiannually on May 1 and November 1. (2) During the first half of the year, additional contributions from individuals and foundations amounted to $300,000, in cash. These funds were invested in RST Corporation stock on June 15. (3) On November 1, the second semiannual interest payment was received from MNO Company. (4) On November 15, a dividend was declared by RST Corporation in the amount of $6,000 and was received in cash. (5) On December 1, RST Corporation stock was sold for $297,000 cash. Those funds were immediately invested in UVW Corporation stock. (6) On December 15, cash distributions in the amount of $84,000 were made to various nonprofit organizations. (7) On December 31, an accrual was made for year-end interest on MNO Company bonds. (8) Also, on December 31, it was determined that the market value of MNO Company bonds, exclusive of accrued interest, was $1,002,000 and that the market value of UVW Company stock was $301,000. b. Post the entries to the Community Foundation Trust ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. 7-C. Part 2. Pension Trust Fund Transactions The City of Everlasting Sunshine Police Department pension plan, a single-employer, definedbenefit plan, reported the following account balances as of January 1, 2012: Debits Credits Cash $55,000 Accrued Interest Receivable 85,000 Investments: Bonds 5,100,000 Investments: Common Stock 1,700,000 Accounts Payable $235,000 Net Assets Held in Trust for Employee Benefits 6,705,000 Totals $6,940,000 $6,940,000 Required: a. Open a general journal for the City of Everlasting Sunshine Police Department Pension Trust Fund and record the following transactions for the year ending December 31, 2012: (1) Member contributions were received in the amount of $400,000. The City General Fund contributed the same amount. (2) Interest was received in the amount of $310,000, including the accrued interest receivable at the beginning of the year. The interest accrual at yearend amounted to $110,000. (3) During the year, common stock dividends amounted to $180,000. (4) Investments were made during the year in common stock in the amount of $700,000. (5) Annuity benefits in the amount of $390,000, disability benefits of $110,000, and refunds to nonvested terminated employees of $50,000 were recorded as liabilities. (6) Accounts payable, in the amount of $620,000, were paid in cash. (7) During the year, common stock valued at $600,000 was sold for $613,000. The $613,000 was reinvested in common stock of a different company. (8) At year-end, the market value of investments in bonds increased by $16,000; the market value of investments in stocks decreased by $3,000. b. Post the entries to the Police Department Pension Trust ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. 7-C. Part 3. Fiduciary Fund Financial Statements Required: Using the balances from Parts 1 and 2 prepare the following: 1. Statement of Changes in Fiduciary Net Assets. 2. Statement of Fiduciary Net Assets Chapter 8 - Government-Wide Statements, Fixed Assets, Long-Term Debt 8-C. Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances from Section 5-C; (3) the proprietary funds Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Fund Net Assets from Section 6-C. Required: 1. Start a worksheet for adjustments, using the trial balance format illustrated in the text (i.e. list accounts with debit balances first, then accounts with credit balances). Enter the balances from the governmental funds financial statements prepared for Section 5-C. Enter debits balances as positives and credit as negatives. When doing this, follow the following guidelines: Net Assets: Use a single account for net assets (which will include the beginning balance of all fund balance accounts). Intergovernmental Revenues: When setting up the worksheet, set up separate lines for the intergovernmental revenues as follows: State Grant for Highway and Street Maintenance Capital GrantGeneral Government Capital GrantPublic Safety Grant for Law Enforcement Programs $ 975,000 250,000 250,000 288,000 Capital Assets: It is not necessary to set up separate lines for different classes of fixed assets or accumulated depreciation (simply use one row for Capital Assets and another for Accumulated Depreciation). Confirm that the total debits and credits equal $19,237,240. 2. Prepare worksheet entries and post to the worksheet for the following items. Identify each adjustment by the letter used in the problem: a. Record the January 1, 2012 balances of general fixed assets and related accumulated depreciation accounts. The City of Everlasting Sunshine had the following balances (excluding Internal Service Funds): Land Buildings Improvements Other than Buildings Equipment Totals Cost 5,125,000 30,200,000 20,000,000 8,375,000 63,700,000 Accumulated Depreciation 12,100,000 8,200,000 4,800,000 25,100,000 b. Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. c. Depreciation expense (governmental activities) for the year totaled $ 2,592,500. d. Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium. e. As of January 1, 2012, the City of Everlasting Sunshine had $6,000,000 in general obligation bonds outstanding. f. Eliminate the expenditures for bond principal. g. Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2012. The computation is as follows: ($5,600,000 .06 6/12) + ($4,000,000 . 08 6/12) = $328,000). h. Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2012 fund basis statements, ($6,000,000 .06 6/12) = $180,000. i. Amortize bond premium in the amount of $2,500. j. Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes. k. Adjust for the $20,000 of property taxes that was deferred in 2011 and recognized as revenue in the 2012 fund-basis statements. l. Assume the City adopted a policy in 2012 of allowing employees to accumulate compensated absences. Make an adjustment accruing the expense of $ 316,000 Charge compensated absences expense. m. Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries). n. No revenues from internal service funds were with external parties. Assume $13,200 of the $21,200 Due from Other Funds in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $13,200 interfund receivables. o. Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount. p. Eliminate transfers that are between departments reported within governmental activities. 3. Prepare, in good form, a Statement of Activities for the City of Everlasting Sunshine for the Year Ended December 31, 2012. For purposes of this statement, assume: $ 288,000 in the General Fund is a state grant specifically for law enforcement programs. $ 975,000 in the Street and Highway Fund is an operating grant specifically for certain highway and street expenses. $ 500,000 in the City Hall Construction Fund is a capital grant that applies one-half to general government and one-half to public safety. Use the balances computed from the worksheet completed in part 2 for the governmental activities portion of the statement. Use the solution to P6-C (Enterprise fund) to prepare the business activities portion (net any short-term interfund payables/receivables). 4. Prepare, in good form, a Statement of Net Assets for the City of Everlasting Sunshine as of December 31, 2012. Group all capital assets, net of depreciation. Include a breakdown in the Net Assets section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted. For purposes of classifying net assets for the governmental activities, assume: For the governmental activities net assets invested in capital assets, net of related debt, the related debt includes the bonds payable, the premium on bonds payable, and the $20,000 advance from the water utility fund. The special revenue fund resources are restricted by the granting agency for street and highway maintenance. These ($ 338,200) are the only restricted resources in the governmental activities. 5. Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net assets in the government-wide Statement of Net Assets. 6. 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 assets in the government-wide Statement of Activities. Chapter 13 - Auditing, Tax-Exempt Organizations, and Evaluating Performance Assemble the financial statements prepared for the City of Everlasting Sunshine. These financial statements will be in the solutions to Exercises 5-C, 6-C, 7-C, and 8-C. Assume a population of 20,000 and fair value of property in the amount of $300 million. Compute the following ratios, following the guidance used for the Village of Elizabeth in this chapter: (1) Net debt per capita. (2) Net debt to fair value of property. (3) Net debt to assets. (4) Debt service to total expendituresGeneral and debt service funds. (5) Net assets/expenses. (6) Unrestricted net assets/expenses. (7) Unreserved fund balance/revenuesGeneral Fund. (8) Governmental revenues per capita. (9) Interest coveragerevenue bonds. (10) Operating ratioenterprise funds. Chapter 5 - Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent 5-C. Part 1. Capital Projects Fund Transactions The voters of the City of Everlasting Sunshine approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new annex to the City Hall. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $500,000 grant was expected from the state government. Required: a. Open a general journal for the City Hall Annex Construction Fund. Record the following transactions and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2012, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $50,000 premium. The bonds are to mature in blocks of $200,000 each year over a 20-year period commencing January 1, 2013. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2012. The premium was transferred to the City Hall Annex Debt Service Fund for the future payment of principal on the bonds. (2) The receivable from the state government was recorded. (3) Legal and engineering fees early in the project were paid in the amount of $53,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $210,000. (5) Preliminary plans were approved, and the architects were paid 20 percent of the fee. (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $126,000 to the architects was approved and paid. (7) Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $3,800,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $2,000,000. Payment was approved and vouchered with the exception of a 5 percent retainage. (9) Cash in the full amount of the grant was received from the state government. (10) Furniture and equipment for the annex were ordered at a total cost of $410,000. (11) Payment was made to the contractor for the amount vouchered (see 8 above). (12) The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was vouchered and paid. (13) Furniture and equipment were received at a total actual installed cost of $405,550. Invoices were approved for payment. (14) The remainder of the architects' fees was approved for payment. (15) The City Hall Annex Construction Fund paid all outstanding liabilities on December 31, 2012. The remaining cash was transferred to the City Hall Annex Debt Service Fund. b. Post the entries to the City Hall Annex Construction Fund general ledger. c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 2. Existing Debt Service Fund Transactions The City Hall Debt Service Fund of the City of Everlasting Sunshine has been open for five years; it was created to service an $8,000,000, 6 percent tax-supported bond issue. As of December 31, 2011, this serial bond issue had a balance of $6,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2012, were Cash with Fiscal Agent and Fund BalanceAssigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2011 in order to be able to pay bond principal and interest due on January 1, 2012.) The government chose not to accrue interest payable. Required: a. Open a general journal for the City Hall Debt Service Fund and prepare journal entries for the following transactions. Control accounts are not necessary (1) The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. (2) Cash in the amount of $168,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day. (4) Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal payments due on January 1, 2012. The government elected to not accrue the interest or principal at year-end. b. Post the entries to the City Hall Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 3. New Debt Service Fund Transactions On the advice of the city attorney, a City Hall Annex Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2012 (see Part 1). Required: a. Open a general journal for the City Hall Annex Debt Service Fund. Record the following transactions, as necessary. Control accounts are not necessary (1) The premium described in transaction 1 of Part 1 was received as a transfer from the capital projects fund. (2) Cash in the amount of $160,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest due that day. (4) The transfer described in part c of Part 1 was received. (5) Cash in the amount of $360,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for interest and principal payments due on January 1, 2010. The remaining cash on hand was invested. The government elected to not accrue the interest at year-end. b. Post the entries to the City Hall Annex Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. Assume any remaining net resources are classified as Fund Balance - Assigned for Debt Service. 5-C. Part 4. Governmental Funds Financial Statements Required: a. Prepare a Balance Sheet for the governmental funds for the City of Everlasting Sunshine as of December 31, 2012. Include the General Fund, the Street and Highway Fund (P4-C), the City Hall Debt Service Fund, and the City Hall Annex Debt Service Fund. Use the balances computed in 4-C for the General Fund and special revenue fund portions of this statement. b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the governmental funds for the City of Everlasting Sunshine for the Year Ended December 31, 2012. Include the same funds as listed in requirement a plus the City Hall Annex Construction Fund. Chapter 6 - Proprietary Funds 6-C. Part 1. Internal Service Fund Transactions The Stores and Service Fund of the City of Everlasting Sunshine had the following account balances as of January 1, 2012: Debits Credits Cash $12,000 Due from other funds 25,000 Inventory of supplies 50,000 Land 15,000 Buildings 44,000 Accumulated depreciationbuildings $11,000 Equipment 21,000 Accumulated depreciationequipment 10,500 Accounts payable 7,500 Advance from water utility fund 30,000 Net assets 108,000 Totals $167,000 $167,000 Required: a. Open a general journal for the City of Everlasting Sunshine Stores and Service Fund and record the following transactions. (1) A budget was prepared for FY 2012. It was estimated that the price charged other departments for supplies should be 1.16% of cost to achieve the desired breakeven for the year. (2) The amount due from other funds as of January 1, 2012, was collected in full. (3) During the year, supplies were ordered and received in the amount of $285,000. This amount was vouchered. (4) $10,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged. (5) During the year, supplies costing $270,000 were issued to the General Fund, and supplies costing $50,000 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup (1 above). (6) Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $10,100; Warehousing, $15,300; Delivery, $13,200; and Administrative, $7,300. (7) Cash was received from the General Fund in the amount of $300,000 and from the Water Utility Fund in the amount of $50,000. (8) Accounts payable were paid in the amount of $330,000. (9) Depreciation in the amount of $2,200 was recorded for buildings and $2,100 for equipment. b. Post the entries to the Stores and Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming there are no Restricted Net Assets. 6-C. Part 2. Enterprise Fund Transactions The City of Everlasting Sunshine maintains a Water and Sewer Fund to provide utility services to its citizens. As of January 1, 2012, the City of Everlasting Sunshine Water and Sewer Fund had the following account balances: Debits Credits Cash $111,200 Customer Accounts Receivable 113,000 Estimated Uncollectible Accounts Receivable $2,260 Materials and Supplies 72,400 Advance to Stores and Services Fund 30,000 Restricted Assets 135,000 Utility Plant in Service 4,135,200 Construction Work in Progress 215,000 Accumulated Depreciation - Utility Plant 692,600 Accounts Payable 116,000 Revenue Bonds Payable 2,300,000 Net Assets 1,700,940 Totals $4,811,800 $4,811,800 Required: a. Open a general journal for the City of Everlasting Sunshine Water and Sewer Utility Fund and record the following transactions. (1) During the year, sales of water to nonmunicipal customers amounted to $910,600, and sales of water to the General Fund amounted to $45,000. (2) Collections from nonmunicipal customers amounted to $875,000. (3) The Stores and Services Fund repaid $10,000 of the long-term advance to the Water and Sewer Fund. (4) Materials and supplies in the amount of $270,000 were received. A liability in that amount was recorded. (5) Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $135,000; selling, $15,000; administration, $64,000; construction work in progress, $59,000. (6) Payroll costs for the year totaled $416,200. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. In addition, taxes that are expenses of the utility amounted to $34,200. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $240,800; sales, $24,900; administration, $91,400; construction work in progress, $93,300. (7) Bond interest in the amount of $184,000 was paid. (8) Interest in the amount of $13,100 (included in 7 above) was reclassified to Construction Work in Progress. (9) Construction projects were completed in the amount of $250,000, and the assets were placed in service. Payment was not yet made. (10) Collection efforts were discontinued on bills totaling $1,560. The unpaid receivables were written off. (11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $4,160. (12) Payment of accounts payable amounted to $217,000. Payments of payroll taxes totaled $95,200. (13) Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies. (14) Depreciation expense for the year was computed to be $210,000. (15) In accord with the revenue bond indenture, $15,000 cash was transferred from operating cash to restricted assets. b. Post the entries to the Water and Sewer Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets. 6-C. Part 3. Proprietary Fund Financial Statements Required: Prepare, in good form, for the proprietary funds accounted for in Parts 1 and 2, the following: (1) A Statement of Revenues, Expenses, and Changes in Fund Net Assets for the Year Ended December 31, 2012. (2) A Statement of Net Assets, as of December 31, 2012. Net the amounts due to and due from the General Fund. (3) A Statement of Cash Flows for the Year Ended December 31, 2012. Include restricted assets as a part of cash and cash equivalents for this statement. Chapter 7 - Fiduciary (Trust) Funds 7-C. Part 1. Private Purpose Trust Fund Transactions The City of Everlasting Sunshine Community Foundation private-purpose trust fund had the following account balances on January 1, 2012: Debits Credits Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 Accrued Interest Receivable . . . . . . . . . . . . . . . . . . 13,333 Investments in MNO Company Bonds . . . . . . . . . . 1,000,000 Net Assets Held in Trust .................. . . . . . . . . . $1,048,333 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,048,333 $1,048,333 Required: a. Open a general journal for the City of Everlasting Sunshine Community Foundation Trust Fund and record the following transactions for the year ending December 31, 2012: (1) On May 1, the first semiannual interest payment was received on the MNO Company bonds. The bonds pay 8 percent annual interest, semiannually on May 1 and November 1. (2) During the first half of the year, additional contributions from individuals and foundations amounted to $300,000, in cash. These funds were invested in RST Corporation stock on June 15. (3) On November 1, the second semiannual interest payment was received from MNO Company. (4) On November 15, a dividend was declared by RST Corporation in the amount of $6,000 and was received in cash. (5) On December 1, RST Corporation stock was sold for $297,000 cash. Those funds were immediately invested in UVW Corporation stock. (6) On December 15, cash distributions in the amount of $84,000 were made to various nonprofit organizations. (7) On December 31, an accrual was made for year-end interest on MNO Company bonds. (8) Also, on December 31, it was determined that the market value of MNO Company bonds, exclusive of accrued interest, was $1,002,000 and that the market value of UVW Company stock was $301,000. b. Post the entries to the Community Foundation Trust ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. 7-C. Part 2. Pension Trust Fund Transactions The City of Everlasting Sunshine Police Department pension plan, a single-employer, definedbenefit plan, reported the following account balances as of January 1, 2012: Debits Credits Cash $55,000 Accrued Interest Receivable 85,000 Investments: Bonds 5,100,000 Investments: Common Stock 1,700,000 Accounts Payable $235,000 Net Assets Held in Trust for Employee Benefits 6,705,000 Totals $6,940,000 $6,940,000 Required: a. Open a general journal for the City of Everlasting Sunshine Police Department Pension Trust Fund and record the following transactions for the year ending December 31, 2012: (1) Member contributions were received in the amount of $400,000. The City General Fund contributed the same amount. (2) Interest was received in the amount of $310,000, including the accrued interest receivable at the beginning of the year. The interest accrual at yearend amounted to $110,000. (3) During the year, common stock dividends amounted to $180,000. (4) Investments were made during the year in common stock in the amount of $700,000. (5) Annuity benefits in the amount of $390,000, disability benefits of $110,000, and refunds to nonvested terminated employees of $50,000 were recorded as liabilities. (6) Accounts payable, in the amount of $620,000, were paid in cash. (7) During the year, common stock valued at $600,000 was sold for $613,000. The $613,000 was reinvested in common stock of a different company. (8) At year-end, the market value of investments in bonds increased by $16,000; the market value of investments in stocks decreased by $3,000. b. Post the entries to the Police Department Pension Trust ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Net Assets. 7-C. Part 3. Fiduciary Fund Financial Statements Required: Using the balances from Parts 1 and 2 prepare the following: 1. Statement of Changes in Fiduciary Net Assets. 2. Statement of Fiduciary Net Assets Chapter 8 - Government-Wide Statements, Fixed Assets, Long-Term Debt 8-C. Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances from Section 5-C; (3) the proprietary funds Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Fund Net Assets from Section 6-C. Required: 1. Start a worksheet for adjustments, using the trial balance format illustrated in the text (i.e. list accounts with debit balances first, then accounts with credit balances). Enter the balances from the governmental funds financial statements prepared for Section 5-C. Enter debits balances as positives and credit as negatives. When doing this, follow the following guidelines: Net Assets: Use a single account for net assets (which will include the beginning balance of all fund balance accounts). Intergovernmental Revenues: When setting up the worksheet, set up separate lines for the intergovernmental revenues as follows: State Grant for Highway and Street Maintenance Capital GrantGeneral Government Capital GrantPublic Safety Grant for Law Enforcement Programs $ 975,000 250,000 250,000 288,000 Capital Assets: It is not necessary to set up separate lines for different classes of fixed assets or accumulated depreciation (simply use one row for Capital Assets and another for Accumulated Depreciation). Confirm that the total debits and credits equal $19,237,240. 2. Prepare worksheet entries and post to the worksheet for the following items. Identify each adjustment by the letter used in the problem: a. Record the January 1, 2012 balances of general fixed assets and related accumulated depreciation accounts. The City of Everlasting Sunshine had the following balances (excluding Internal Service Funds): Land Buildings Improvements Other than Buildings Equipment Totals Cost 5,125,000 30,200,000 20,000,000 8,375,000 63,700,000 Accumulated Depreciation 12,100,000 8,200,000 4,800,000 25,100,000 b. Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. c. Depreciation expense (governmental activities) for the year totaled $ 2,592,500. d. Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium. e. As of January 1, 2012, the City of Everlasting Sunshine had $6,000,000 in general obligation bonds outstanding. f. Eliminate the expenditures for bond principal. g. Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2012. The computation is as follows: ($5,600,000 .06 6/12) + ($4,000,000 . 08 6/12) = $328,000). h. Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2012 fund basis statements, ($6,000,000 .06 6/12) = $180,000. i. Amortize bond premium in the amount of $2,500. j. Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes. k. Adjust for the $20,000 of property taxes that was deferred in 2011 and recognized as revenue in the 2012 fund-basis statements. l. Assume the City adopted a policy in 2012 of allowing employees to accumulate compensated absences. Make an adjustment accruing the expense of $ 316,000 Charge compensated absences expense. m. Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries). n. No revenues from internal service funds were with external parties. Assume $13,200 of the $21,200 Due from Other Funds in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $13,200 interfund receivables. o. Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount. p. Eliminate transfers that are between departments reported within governmental activities. 3. Prepare, in good form, a Statement of Activities for the City of Everlasting Sunshine for the Year Ended December 31, 2012. For purposes of this statement, assume: $ 288,000 in the General Fund is a state grant specifically for law enforcement programs. $ 975,000 in the Street and Highway Fund is an operating grant specifically for certain highway and street expenses. $ 500,000 in the City Hall Construction Fund is a capital grant that applies one-half to general government and one-half to public safety. Use the balances computed from the worksheet completed in part 2 for the governmental activities portion of the statement. Use the solution to P6-C (Enterprise fund) to prepare the business activities portion (net any short-term interfund payables/receivables). 4. Prepare, in good form, a Statement of Net Assets for the City of Everlasting Sunshine as of December 31, 2012. Group all capital assets, net of depreciation. Include a breakdown in the Net Assets section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted. For purposes of classifying net assets for the governmental activities, assume: For the governmental activities net assets invested in capital assets, net of related debt, the related debt includes the bonds payable, the premium on bonds payable, and the $20,000 advance from the water utility fund. The special revenue fund resources are restricted by the granting agency for street and highway maintenance. These ($ 338,200) are the only restricted resources in the governmental activities. 5. Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net assets in the government-wide Statement of Net Assets. 6. 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 assets in the government-wide Statement of Activities. Chapter 13 - Auditing, Tax-Exempt Organizations, and Evaluating Performance Assemble the financial statements prepared for the City of Everlasting Sunshine. These financial statements will be in the solutions to Exercises 5-C, 6-C, 7-C, and 8-C. Assume a population of 20,000 and fair value of property in the amount of $300 million. Compute the following ratios, following the guidance used for the Village of Elizabeth in this chapter: (1) Net debt per capita. (2) Net debt to fair value of property. (3) Net debt to assets. (4) Debt service to total expendituresGeneral and debt service funds. (5) Net assets/expenses. (6) Unrestricted net assets/expenses. (7) Unreserved fund balance/revenuesGeneral Fund. (8) Governmental revenues per capita. (9) Interest coveragerevenue bonds. (10) Operating ratioenterprise funds