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Answers:
#
Fund or
Nonfund
Accounts Accounts Debit Credit
1a SC GF Taxes Receivable – Current 12,000
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Problem 2 – Private-Purpose Trust Funds
The City of Lucky received a $3,000 gift of cash. The donor stipulated that the principal of the
gift must be maintained intact. Earnings of the trust may be used only to restore historic
buildings. The buildings are owned and maintained by the local, not-for-profit historical society,
which is not part of the city government entity. All amounts are in thousands of dollars.
Transactions:
1. Record the receipt of the gift on January 2, 20X3.
2. The city purchased investments for $2,800.
3. The city earned $200 in interest on some investments and sold investments that cost $750
for $700.
4. The city received bills from the historical society for $140 in repairs to historical
buildings for the year. The city paid $125, with the balance to be repaid later.
5. By year-end the fair value of investments increased $300.
Requirements:
1. Prepare journal entries to record the transactions in a city's accounts. If no entry is
required, state “No entry required” and explain why.
2. Prepare the Statement of Changes in Fund Net Position and Statement of Net Position for
the year ended December 31, 20X3.
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Answers:
Requirement #1
# Accounts Debit Credit
1 Cash 3,000
Additions – Nonexpendable Contributions 3,000
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Requirement #2
City of Lucky
Private Purpose Trust Fund
Statement of Changes in Net Position
For the Year Ended December 31, 20X3
Additions:
Requirement #3
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City of Lucky
Private Purpose Trust Fund
Statement of Net Position
December 31, 20X3
Assets
Problem 3 – Pension Trust Fund Entries
Record the following transactions and information for a government's Pension Trust Fund (all
amounts are in thousands of dollars).
Transactions (all amounts are in thousands of dollars):
1. Employer contributions became due from the General Fund, $400, and an Enterprise
Fund, $150. Equal employee contributions have been withheld from employee
paychecks and also are due to the pension trust fund.
2. Ninety percent of the amounts due were collected from each fund.
3. Investments of $540 were purchased.
4. Interest received on investments of the fund during the year totaled, $380.
5. An employee resigned prior to retirement and withdrew $17 from the pension plan.
6. Retirement benefits of $92 were paid during the year. Additional current benefit
payments of $4 were accrued but not paid by year end.
7. The present value of future benefits earned by active employees during the period is
estimated to be $700.
8. The fair value of the pension plan investments increased by $83 during the year.
9. Prepare the closing entry for the year.
Requirements:
1. Prepare journal entries to record transactions in the City of LeConte Pension Fund
accounts. If no entry is required, state “No entry required” and explain why.
2. Prepare the Statement of Changes in Fiduciary Net Position for the year ended December
31, 20X3. The Net Position – Restricted for Pension Benefits at January 1, 20X3 was
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$3,345.
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Answers:
Requirement #1
# Accounts Debit Credit
1 Due from General Fund (400 x 2) 800
Due from Enterprise Fund (150 x 2) 300
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Requirement #2
City of LeConte
Pension Plan
Statement of Changes in Fiduciary Net Position
For the Year Ended December 31, 20X3
Additions:
Contributions:
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Problem 4 – Interfund, General Capital Assets, and General Long-Term Liabilities Transactions
Transactions (all amounts are in thousands of dollars):
1. Employer contributions became due from the General Fund, $400, and an Enterprise
Fund, $150 to Pension Trust Fund. Total payroll costs were $2,000 for the General Fund
and $900 for the Enterprise Fund. Equal employee contributions are to be withheld from
these payroll costs and paid to the Pension Trust Fund with the balance paid to the
employees.
2. Ninety percent of the amounts due were collected from each fund.
3. A payment in lieu of taxes was made from an Enterprise Fund to the General Fund, $200.
The payment was not for services.
4. A payment in lieu of taxes was made from an Enterprise Fund to the General Fund, $150.
The payment was for services.
5. A vehicle purchased with General Fund resources 3 years ago for $30, was transferred to
an Enterprise Fund. The city has a policy of depreciating all vehicles over a five year
period, using the straight-line depreciation method, and no salvage value.
6. A vehicle purchased by an Enterprise Fund 2 years ago for $25, was transferred to the
Parks and Recreation Department, accounted for in the General Fund. The city has a
policy of depreciating all vehicles over a five year period, using the straight-line
depreciation method, and no salvage value.
7. A Special Revenue Fund advanced $300 to an Internal Service Fund. The loan is to be
repaid in 3 years.
8. When the City expanded the golf course a few years ago, the Enterprise Fund used to
account for it issued $1,500 in long-term bonds. It has been determined that the golf
course will be unable to generate sufficient revenues to repay the debt. Therefore, the
debt was reclassified as general long-term liabilities and will be repaid with general
government resources.
9. Building inspection services, accounted for in the General Fund, were billed to an
Enterprise Fund, $100. The Enterprise Fund paid for the service.
10. Later, it was determined that half the inspection services should have been charged to an
Internal Service Fund. The ISF paid the Enterprise Fund for the services provided by the
General Fund.
Requirement: Prepare journal entries to the record transactions. If no entry is required, state
“No entry required” and explain why.
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Answers:
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