40. (25 Minutes) (Answer questions about ledger account balances)
a. As the Appropriations account balance in the General Fund shows a
total of $171,000, that amount of money has been authorized for
b. The governmental funds are all designed to monitor current financial
resources and their inflows and outflows. Therefore, the Capital
Projects Fund records expenditures made to acquire or construct
c. The Appropriations balance represents the amount that government
d. At the end of the year, any remaining commitments will be removed
from the accounting records by reversing the original encumbrance
entry (which eliminates both the encumbrance and the encumbrance
outstanding).
The government might agree to pay for these commitments even though
e. Money is not recorded in any of the governmental funds (except for the
General Fund) without some explicit reason. It comes from a tax,
perhaps, or a gift or grant. These amounts are only put into these
funds because each has a particular purpose. Thus, a fund balance-
f. Two reasons are most likely for the $150,000 Other Financing Sources
balance. First, a bond may have been issued to finance the
construction project. Because the debt itself is not recorded in the fund
financial statements, the governmental fund must record the receipt by
means of an Other Financing Sources designation.
g. The Debt Service Fund is utilized to accumulate money to pay off the
principal and interest of any long-term liability incurred by the
governmental funds. Payment of both debt and interest is made from
h. Special assessment projects are undertaken by a government to benefit
particular properties with the owners bearing part (or all) of the cost.
Curbing, as an example, or the installation of lights can be special
assessment projects.
i. This designation indicates that the government is reporting one or more
assets that are not free to be spent for future expenditures. In the asset
j. Budgetary entries are optional for Debt Service Funds and are not
typically used. Expenditure levels (for principal and interest) are set
41. (25 Minutes) (Analyzing and reporting government transactions for fund
financial statements)
a. Estimated Revenues $232,000
Appropriations 225,000
Budgetary Fund Balance $ 7,000
b. Initially, under the consumption method, all of the school supplies are
recorded in an asset account such as “Inventory of Supplies.” As the
supplies are used, the cost is reclassified into an Expenditures account.
c. At the end of the year, both the encumbrance balance and the
encumbrance outstanding are removed from the financial records. They
do not represent actual transactions. In creating a balance sheet for the
governmental funds, if this amount has already been set up as a fund-
d. FUND FINANCIAL STATEMENTS
General Fund
Encumbrances Outstanding 111,000
Encumbrances – Ambulance 111,000
Expenditures – Ambulance 120,000
Vouchers Payable 120,000
f. REVENUES:
Government grant appropriately expended $ 24,000
Property taxes to be received 190,000
Business licenses and parking meters 14,000
Total revenues $228,000
42. (20 Minutes) (Prepare basic journal entries for both fund financial
statements and government-wide financial statements)
FUND FINANCIAL STATEMENTS
a. General Fund
Estimated Revenues 834,000
b. Capital Projects Fund (encumbrances for these types of contracts are
optional but are more likely to be made when budgetary entries are being
used)
Encumbrances – Office Building 8,000,000
Encumbrances Outstanding 8,000,000
Expenditures 8,000,000
Contracts Payable 8,000,000
Contracts Payable 8,000,000
Cash 8,000,000
e. General Fund
Other Financing Uses 1,000,000
Cash 1,000,000
h. Special Revenue Fund
Cash 120,000
Revenues 120,000
GOVERNMENT-WIDE FINANCIAL STATEMENTS
a. No entry (budgets are not reported)
b. No entry (commitments are not reported)
c. Governmental Activities
Cash 8,000,000
Bonds Payable 8,000,000
h. This entry is made in Governmental Activities unless toll road is
reported as an Enterprise Fund (a business-type activity).
Cash 120,000
Revenues—Reserved for Highway Maintenance 120,000
43. (15 Minutes) (Prepare fund financial statements)
CITY OF JENNINGS
GENERAL FUND
Statement of Revenues, Expenditures, and Other Changes in Fund Balance
(Condensed)
Year Ending December 31, 2015
Revenues $ 760,000
Transfers in 50,000
Transfers out (470 ,000)
Total Other Financing Sources and Uses (120 ,000)
CITY OF JENNINGS
GENERAL FUND
Balance Sheet (condensed)
December 31, 2015
Assets
Cash $ 30,000
Investments 410,000
Liabilities
Accounts payable $ 90,000
Vouchers payable 180,000
Deferred Inflows of Resources
Unavailable Revenues $ 40,000
Total Deferred Inflows of Resources $ 40,000
Fund Balances
Unassigned $280,000
44. (40 Minutes) (Prepare government-wide and fund financial statements)
The most difficult aspect of this problem is gathering the information for
Government – wide financial statements:
1
Property Tax Receivable 80,000
Cash 320,000
General Revenues—Property Taxes 400,000
2
Maintenance Expense 20,000
Cash 270,000
Depreciation Expense 10,000
Accumulated Depreciation—Equipment 10,000
3
No depreciation is recognized on the computer since this transaction
occurred on the last day of the year.
5
Cash 3,000
Program Revenues—Student Fees 3,000
Fund financial statements:
1
The $30,000 is not viewed as revenue in 2015 because it will not be
available within 60 days to pay claims against current financial resources.
This balance is not reported as a liability because there is no chance of
repayment. Instead, it is a deferred inflow of resources.
2
Expenditures—Salaries 100,000
Expenditures—Rent 70,000
3
No entry is made on the building acquisition since there was no impact on
current financial resources.
4
Expenditures—Computer 4,000
Vouchers Payable 4,000
The second computer is not included here because payment will not be
made within 60 days of the end of the year so there is no impact on current
financial resources.
5
Part a
GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2015
Governmental
Activities
Direct Expenses Program Revenues (net expense)
Governmental Activities:
—School System $200,000 $3,000 $(197,000)
General Revenues:
Ending Net Position $ 203 ,000
STATEMENT OF NET POSITION
December 31, 2015
Governmental
Activities
Assets
—Cash $53,000
—Property Tax Receivable 80,000
Liabilities
—Vouchers Payable $ 8,000
—Long-Term Liabilities 200 ,000 $208 ,000
Net Position