AICPA: BB Industry
30. What three criteria must be met before a governmental unit can elect to not capitalize and therefore
report a work of art or historical treasure as an asset?
31. What are the three broad sections of a state or local government’s CAFR?
32. What information is required in the introductory section of a state or local government’s CAFR?
33. What information is required in the financial section of a state or local government’s CAFR?
34. What is meant by the term fiscally independent?
35. What is meant by the term legally independent?
36. How is the Statement of Cash Flows for Proprietary Funds similar and dissimilar to a Statement of
Cash Flows for a for-profit business?
37. Determine and prepare the journal entries for the City of Wetteville, in the general fund, on the dates
mentioned for each lettered item, for the purposes of preparing the fund financial statements.
38. Determine and prepare the journal entries for the City of Wetteville, on the dates mentioned for each
lettered item, for the purposes of preparing the government-wide financial statements.
39. The parking garage and parking lots owned by the City of Danton reported the following balances for
2018:
Required:
Prepare the appropriate financial statement for the fund that was used to account for parking operations.
$ 190,000
Receipts from the city for parking of city
–
owned vehicles
8,000
Salaries paid to employees
75,000
Printing
—
paid to an
internal service fund
6,000
Interest on bonded debt
10,000
Sculpture for entrance to parking lot (donated during 2018)
12,500
Depreciation on parking garage
30,000
Truck (purchased during 2018)
35,000
Maintenance
—
paid to an
internal service fund
17,000
40. The City of Nextville operates a motor pool serving all city-owned vehicles. The motor pool bought
a new garage by paying $29,000 in cash and signing a note with the local bank for $280,000.
Subsequently, the motor pool performed work for the police department at a cost of $17,000, which had
not yet been collected. Depreciation on the garage amounted to $20,000. The first $12,000 payment
made on the note included $4,800 in interest.
Required:
Prepare the journal entries for these transactions that are necessary to prepare government-wide financial
statements.
Notes Payable
7,200
Cash
12,000
Learning Objective: 17-09
Topic: Reports―G–W Statement of Net Position
Topic: Reports―G–W Statement of Activities
Difficulty: 2 Medium
Blooms: Apply
AACSB: Knowledge Application
AICPA: BB Industry
AICPA: FN Measurement
Use the following to answer questions 41 and 42:
The City of Kamen maintains a collection of paintings of a former citizen in its City Hall building.
During the year, one painting was purchased by the city for $2,000 at an auction using appropriated funds
in the General Fund. Also during the year, a donation of a painting valued at $3,000 was made to the city.
[QUESTION]
41. Prepare the journal entry/entries for the two transactions for the purposes of preparing the
governmental fund financial statements.
General Fund:
Cash
42. Prepare the journal entry/entries for the two transactions for the purposes of preparing the
government-wide financial statements.
Painting
Cash
Painting
Revenue – Donation
43. Prepare the journal entry that should be recorded on December 31, 2018 for government-wide
financial statements.
.
44. Assuming the landfill is recorded within the General fund, how would the landfill information be
represented in the governmental fund financial statements at December 31, 2018?
Fees charged to business owners for Public Safety
7,000
Fees charged to citizens for Sanitation
5,000
Payments:
Salaries
General Government
$ 54,000
Public Safety
43,000
Sanitation
36,000
Rent
General Government
15,000
Public Safety
12,000
Sanitation
3,500
Maintenance
General Government
4,000
Public Safety
2,000
Sanitation
1,500
Insurance
General Government
1,000
Public Safety
2,500
Sanitation
4,500
Final Payment on Debt Principal
5,000
Payment for Interest on Debt
15,000
Receivables at the end of the year:
Property Taxes (80% estimated to be collectible)
$95,000
Payables at year-end: Salaries
General Government
$ 4,000
Public Safety
3,000
Sanitation
4,400
Other items at year-end:
Cash
$130,900
Building
95,000
Equipment
80,000
Supplies Inventory
9,500
Investments
160,000
Year-end utility and maintenance expenses, expected to be
paid in 2 months
9,000
[QUESTION]
45. Prepare a Statement of Revenues, Expenditures and Other Changes in Fund Balances for the year
ended December 31, 2018.
Assets
Cash and cash equivalents
$ 130,900
Investments
160,000
Receivables (net of $19,000 allowance)
76,000
Inventories
9,500
Capital assets (net)
175,000
Total assets
$ 551,400
Liabilities
Salaries payable
$ 11,400
Accrued liabilities
9,000
Property Taxes
$400,000
Income Taxes
100,000
Public Safety
7,000
Sanitation
5,000
Total Revenues
$512,000
Expenditures
Current:
General Government
$ 74,000
Public Safety
59,500
Sanitation
45,500
Debt Service:
Principal Payment on Debt
5,000
Interest on Debt
15,000
Total expenditures
$199,000
Excess of Revenues over Expenditures
$313,000
Net Change in Fund Balance
$313,000
Fund Balance (Beginning)
52,000
Fund Balance (Ending)
$365,000
Learning Objective: 17-09
Topic: Reports―Governmental-Revenue-Expend-Changes
Difficulty: 3 Hard
Blooms: Apply
AACSB: Knowledge Application
AICPA: BB Industry
AICPA: FN Measurement
[QUESTION]
46. Prepare a Statement of Net Position at December 31, 2018.
Net position
Invested in capital assets
$ 175,000
Unrestricted
356,000
Total net position
$ 531,000
Learning Objective: 17-09
Topic: Reports―G–W Statement of Net Position
Difficulty: 3 Hard
Blooms: Apply
AACSB: Knowledge Application
AICPA: BB Industry
AICPA: FN Measurement
[QUESTION]
47. Prepare a Statement of Activities for the year ended December 31, 2018.