48. The following are selected activities for the Monterey City Natural Gas Company, a governmental entity:
a.
Billing for the year:
To outside customers
$400,000
To other Monterey City funds
70,000
b.
Service provided to outside customers but not billed by year end totaled $28,000.
c.
During the year, $2,500 was collected from new customers as a refundable connection fee.
d.
The utility sold $300,000 of 6% revenue bonds at 97 on an interest payment date. Proceeds are earmarked for
construction.
e.
Depreciation for the year was as follows:
Buildings
$30,000
Improvements other than buildings
14,000
Machinery and equipment
96,000
f.
The utility refunded $1,000 of deposits to customers who had moved.
Required:
Prepare journal entries to record the activities.
a.
Accounts Receivable
400,000
Due from Other Funds
70,000
Operating Revenues
470,000
b.
Accounts Receivable
28,000
Operating Revenues
28,000
c.
Restricted Assets—Customers’ Deposits
Cash
2,500
Customers’ Deposits Payable from
Restricted Assets
2,500
d.
Restricted Assets—Revenue Bond
Construction Cash
291,000
Unamortized Bond Discount on Revenue
Bonds
9,000
6% Revenue Bonds Payable
300,000
e.
Depreciation Expense
140,000
Accumulated Depreciation—Building
30,000
Accumulated Depreciation—Improvements
Other Than Building
14,000
Accumulated Depreciation—Machinery
and Equipment
96,000
Customers’ Deposits Payable from
Restricted Assets
1,000
Restricted Assets—Customers’ Deposits
Cash
1,000
49. Given the following information for the City of Youngstown Municipal Golf Course:
Cash Balance 1/1/01
$ 25,000
User Fees-Green Fees
375,000
Net Repayment-Revolving Loan
35,000
Operating Transfer Out-General Fund (property taxes)
50,000
User Fees-League Fees and outings
100,000
User Fees-Memberships
25,000
Cash Expenses Paid to suppliers
95,000
Interest/Dividends Received
12,000
Acquisition/Improvement to Clubhouse
75,000
Cash Expenses Paid to employees
105,000
Cash Expenses Paid Maintenance and Upkeep
100,000
Principal and Interest Payments on Bond
50,000
Prepare a cash flow statement for this enterprise fund.
City of Youngstown
Municipal Golf Course Fund
Statement of Cash Flows
Increase/(Decrease) in Cash and Cash Equivalents
For Year Ended 12/31/01
Cash Flows from Operating Activities:
Cash Received from Customers (1)
500,000
Cash Paid for Operating Expenses (2)
(300,000)
Net Cash Provided by Operating Activities
200,000
Cash Flows from Noncapital
Financing Activities:
Net Repayments-Revolving Loan
(35,000)
Operating Transfers Out-to other funds
(50,000)
Net Cash Used in Noncapital
Financing Activities
(85,000)
Cash Flows from Capital
and Related Financing Activities:
Principal and interest paid on bonds
(50,000)
Acquisition and
construction-capital assets
(75,000)
Net Cash Used in Capital and Related
Financing Activities
(125,000)
Cash Flows from Investing Activities:
Interest and Dividends Received
12,000
Net Cash Provided by Investing Activities
12,000
Net Increase in Cash and Cash Equivalents
2,000
Cash and Cash Equivalents 1/1/01
25,000
Cash and Cash Equivalents 12/31/01
27,000
50. Rankin City established a Central Printing and Reproductions Fund during the fiscal year ending 6/30/05.
Transactions affecting the fund are as follows:
a.
The fund was established with a $100,000 contribution from the General Fund on 7/1/04. The transfer will be recorded as Contributed
Capital for the fund.
b.
Equipment costing $30,000 was acquired on 7/3/04. The equipment is assigned a 10 year life, no salvage. It will be paid at a future date.
c.
Supplies costing $65,000 were acquired. A physical inventory was taken on 6/30/05 of the supplies, the count showed supplies valued at
$11,000. The voucher will be paid at a later date.
d.
Various operating expenses were incurred for a total of $67,000. Of that amount, $7,000 represented charges from the city’s electric utility
(an enterprise fund). All the vouchers were then paid. The payments for the equipment and supplies acquisition are also made.
e.
Total billings to the city’s various departments were $125,000. Of this amount, $9,000 pertained to services performed for the city’s electric
utility (enterprise fund).
f.
Cash was collected on the above billings in full.
Required:
Make the necessary journal entries for fiscal year 2004-2005 (ending 6/30/05) for Rankin City’s Internal Service Fund including any year end
adjusting entries. Closing entries are not required.
Cash
100,000
Interfund transfers-in—Contributions from Municipality
100,000
b.
Equipment
30,000
Vouchers Payable
30,000
Supplies Inventory
65,000
Vouchers Payable
65,000
d.
Operating Expenses
67,000
Vouchers Payable
60,000
Due to Electric Utility Fund
7,000
Vouchers Payable
155,000
Due to Electric Utility Fund
7,000
Cash
162,000
Due from the General Fund
116,000
Due from Electric Utility Fund
9,000
Operating Revenues
125,000
f.
Cash
125,000
Due from the General Fund
116,000
Due from Electric Utility Fund
9,000
Necessary Year End Adjustments
Depreciation Expense
3,000
Accumulated Depreciation
3,000
Operating Expenses
54,000
Supplies Inventory
54,000
51. The City of Light Falls operates a centralized garage and charges the other departments on a per-mile basis
for the purchase and maintenance of most city-owned vehicles.
Required:
Make journal entries to record the following selection of transactions concerning the motor pool during the
following year:
a.
Salaries of $360,000 were paid during the year.
b.
A bill from the Water and Sewer Enterprise Fund for $8,000 was received and paid.
c.
Eight new vehicles costing $24,000 each were purchased for cash.
d.
Billing to other city funds were as follows:
General Fund
$550,000
Utility Fund
130,000
Special Revenue Fund
20,000
e.
All of the billings in (d) except $50,000 from the Utility Fund were paid.
f.
Depreciation expense on the motor pool assets was $225,000 for the year.
a.
Operating Expenses
360,000
Cash
360,000
b.
Operating Expenses
8,000
Cash
8,000
c.
Vehicles
192,000
Cash
192,000
d.
Due from General Fund
550,000
Due from Utility Fund
130,000
Due from Special Revenue Fund
20,000
Operating Revenue
700,000
e.
Cash
650,000
Due from General Fund
550,000
Due from Utility Fund
80,000
Due from Special Revenue Fund
20,000
Operating Expenses
225,000
Allowance for Depreciation—Vehicles
225,000
52. The following selected events occurred in Hershey City’s Internal Service Fund for its automobile fleet:
a.
An automobile fleet Internal Service Fund was established. The General Fund
provided $85,000 for its working capital. Of this amount, $40,000 is to be repaid
in equal annual installments over a five-year period. The remaining $45,000 is a
contribution that will not be repaid.
b.
Billings for services to other funds are as follows:
To the General Fund
$608,000
To an Enterprise Fund
$112,000
c.
A one-year insurance policy is purchased. By year end, one-half of the $18,000
premium payment has expired.
d.
Depreciation for the period:
Building
$ 4,500
Machinery and equipment
$65,000
e.
Invoices for various goods and services received totaled $127,000.
Required:
Omitting explanations, prepare journal entries for all funds and groups affected, using the following format:
Funds or Account
Event
Groups Affected
Journal Entries
53. A Nonexpendable Trust Fund was established to help pay for Little League baseball. A total of $100,000
was donated to Babe City. The earnings, not the principal, from the donation could be used to fund baseball.
Required:
Make the entries and identify the fund into which the following transactions should be made:
a.
The donation is received and invested immediately in a mutual stock fund.
b.
Cash dividends of $8,500 were received from the mutual fund and made available for spending.
c.
During the first baseball season, $8,300 was spent from the fund.
d.
The closing entries were made.
a.
Endowment Principal Fund
Cash
100,000
Fund Balance
100,000
Investments
100,000
Cash
100,000
b.
Endowment Principal Fund
Cash
8,500
Revenue
8,500
Cash
8,500
Endowment Earnings Fund
Cash
8,500
Other Financing Sources
8,500
Endowment Earnings Fund
Expenditures
8,300
Cash
8,300
d.
Endowment Principal Fund
Revenue
8,500
Operating Transfer Out
8,500
Endowment Earnings Fund
Other Financing Sources
8,500
Expenditures
8,300
Fund Balance—Unassigned
200
54. Consider the following transactions:
a.
The Cline County Tax Agency Fund was established to account for the county’s responsibility of collecting Brent City and Cline County
property taxes. The levies for 20X1 were $800,000 for the County General Fund and $400,000 for the City General Fund.
b.
Collections were $750,000 (in proportion to levies).
c.
The county is entitled to a fee of 1% of taxes collected for Brent City; the net amount due is sent to the city. Liabilities to all funds and
units were recorded to date.
d.
All moneys collected to date were released to each government unit.
Required:
Prepare the general journal entries required to record the following transactions in Cline County Tax Agency Fund.
Tax Receivable for All Units
1,200,000
Due to Other Governmental Funds and Units
1,200,000
b.
Cash
750,000
Tax Receivable for All Units
750,000
Due to Other Governmental Funds and Units
750,000
Due to Cline County General Fund (1)
502,500
Due to Brent City (2)
247,500
d.
Due to Cline County General Fund
502,500
Due to Brent City
247,500
Cash
750,000
55. In the space provided, fill in the name of the one fund or account group in which each of the following items
is most likely to be recorded.
Item
Name of Fund or Group
(1)
Services financed by user fees charged against other funds
_______________________________
(2)
Resources used for construction of major general fixed assets
_______________________________
(3)
Operations of general governmental functions
_______________________________
(4)
Assets held for distribution to other governments or for individuals
_______________________________
(5)
Accumulation of resources for and payment of general long-term
debt assets
_______________________________
(6)
Total historical cost of buildings owned by the government
_______________________________
(7)
Activities related to an employee retirement program
_______________________________
(8)
Services financed by user charges against the general public
_______________________________
(9)
Accountability for assets whose principal must be preserved and are
invested to produce earnings for a designated external purpose
_______________________________
Internal Service Fund
Capital Projects Fund
General Fund
Agency Fund
Debt Service Fund
General Fixed Assets Account Group
Pension Trust Fund
Enterprise Fund
Private Purpose Trust
56. Place a check mark in the appropriate column to indicate in which of the following funds and accounts
groups the given accounts would commonly be found:
Funds
Debt
Capital
Account Title
General
Service
Projects
Enterprise
(1)
Cash
_______
_______
_______
_______
(2)
Buildings
_______
_______
_______
_______
(3)
Improvements other
than buildings
_______
_______
_______
_______
(4)
Depreciation expense
_______
_______
_______
_______
(5)
Construction in process
_______
_______
_______
_______
(6)
Amount available in
Debt Service Fund
_______
_______
_______
_______
(7)
Vouchers payable
_______
_______
_______
_______
(8)
Matured bonds payable
_______
_______
_______
_______
(9)
General obligation
bonds payable
_______
_______
_______
_______
(10)
Fund balance—assigned
_______
_______
_______
_______
Account Groups
General
General
Fixed
Long-term
Account Title
Assets
Debt
(1)
Cash
_______
_______
(2)
Buildings
_______
_______
(3)
Improvements other than buildings
_______
_______
(4)
Depreciation expense
_______
_______
(5)
Construction in process
_______
_______
(6)
Amount available in Debt Service Fund
_______
_______
(7)
Vouchers payable
_______
_______
(8)
Matured bonds payable
_______
_______
(9)
General obligation bonds payable
_______
_______
(10)
Fund balance—assigned
_______
_______
57. The following selected events occurred in the City of Canterbury.
a.
On December 31, 20X7, $250,000 was transferred from the General Fund to establish a central garage
to service the city’s vehicles. Of this amount, $150,000 was spent on January 2, 20X8, to acquire a
building with an estimated life of 25 years, $30,000 was spent for the acquisition of land, and $60,000
was paid for equipment with an estimated life of 10 years.
b.
During the six months of operation to June 30, 20X8, the garage billed the General Fund for $24,000
and Enterprise Funds for $50,000. Except for $8,000 still due from Enterprise Funds, the balance is
collected.
c.
Canceled checks revealed the following payments for garage activities:
Salaries (ignore deductions and taxes)
$31,000
Parts and supplies (perpetual system)
19,000
Service provided by the city-owned utility
2,000
Total payments
$52,000
d.
At fiscal year end, the following adjustments were related to garage operations:
Inventory of parts and supplies on hand
$7,000
Depreciation
To be
computed.
e.
On July 1, 20X7, the city issued 10-year, $400,000, 8% general obligation serial bonds at 101 to
finance the construction of a public health center for the aging. The premium on the bond sale is
transferred to the Debt Service Fund for interest payment. Each $40,000 serial is redeemable on June
30, along with annual interest on the outstanding bond face value. The project is estimated to cost
$430,000 and will be completed in less than one year. The General Fund will transfer resources, if
needed, to cover the total cost. The city uses budgetary accounts for these projects.
f.
During the fiscal year, construction of the public health center was completed at a cost of $426,000, of
which $400,000 was paid, the remainder is payable after one year under a retained percentage contract
arrangement. The $26,000 deficiency was transferred from the General Fund.
g.
On June 28, 20X8, $68,000 is transferred from the General Fund to be applied to the payment of the
first $40,000 bond serial mentioned in e., plus interest. On this date, the Debt Service Fund records the
maturing bonds and interest.
h.
On June 30, the payment for the matured bond serial and interest is made.
Required:
For each event, prepare the necessary journal entries for all funds and account groups involved during the fiscal year ended June 30, 20X8. Indicate
the fund or group in which the entries are made.
58. The City of Newport operates its own solid waste landfill and charges fees to users who dump solid waste in
the landfill. When should estimated costs for closure and post-closure care be accounted for?
59. What is escheat property and how do we account for it?
60. What reporting is required for the accounting for employee Pension Trust Funds.