978-0132751261 Problem Part 10

Answers:

#

Fund or

Nonfund

Accounts Accounts Debit Credit

1a SC GF Taxes Receivable – Current 12,000

91

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

93

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

94

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

95

$3,345.

96

Answers:

Requirement #1

# Accounts Debit Credit

1 Due from General Fund (400 x 2) 800

Due from Enterprise Fund (150 x 2) 300

97

Requirement #2

City of LeConte

Pension Plan

Statement of Changes in Fiduciary Net Position

For the Year Ended December 31, 20X3

Additions:

Contributions:

98

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.

99

Answers:

100