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1
GOVERNMENTAL ACCOUNTING PRACTICE SET
Part A due:
Part B due:
Introduction
The date is December 31, 2091. You have just risen from a three month cryogenic sleep during
harvests per Earth year. All banking is performed on Earth through electronic funds transfers. A
substantial business sector has developed, servicing the farming operations.
After several decades of hard work the inhabitants of Europa are beginning to enjoy the rewards
of their labors and are seeking some of the services which can only be provided by a local
centralized government. They naturally sought to establish this government on Europa and
Council over the next 20 years.
Having no qualified governmental accountants on Europa, the province administrator has simply
made notes summarizing the transactions which have occurred since the beginning of operations.
Your task is to establish a fund accounting system, prepare summary journal entries recording all
transactions, and prepare the year end 12-31-2091 financial statements for the Province.
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Part A:
1. Cover sheet with names of group members
2. Fund-basis financial statements, including a Budget Comparison Statement for the
3. Ledgers (t-accounts) with journal entries for each fund and account group
Part B:
1. Cover sheet with names of group members
2. Government-wide Financial Statements
3. Worksheets and journal entries for the governmental activities portion of the
Government-wide financial statements
Check figures:
General fund cash: $ 143,249
General fund unassigned fund balance 85,229
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PROVINCE OF EUROPA
Transaction list
for the year ended December 31, 2091
Account Structure:
Because the Province has a limited number of revenue sources, revenue
control accounts are not used. Rather, General Fund revenues are
directly recorded into the following accounts (property taxes, sales
taxes, fees licenses and permits, program fees, and intergovernmental
Beginning Balances:
1. At 12-31-2090, the remaining cash and supplies on hand in the
government offices were transferred to the new Province government.
The opening trial balance for the Province for 1-1-2091 was as
follows:
GENERAL FUND
trial balance
Jan. 1, 2091
debits credits
The supplies were office supplies for general government operations.
2. On December 31, 2090, the United Earth Council (U.E.C.) transferred
the fixed assets which have been constructed with U.E.C. funds. The
Province Council assigned custody of these assets to the general
Province government and the Bureau of Electricity and Water as
follows:
Useful Salvage
Government Bureau Life Value
In return for these assets, the Province government issued
Current Year Transactions:
3. The government of the Europa Province established the Bureau of
Electricity and Water. The Bureau of Electricity and Water is in
4. On January 1, 2091, The Province Council approved budgets for 2091
as follows:
Budget Items
Province
Government
(General
Fund)
Capital
Additions
Bureau of
Electricity
and Water
Revenue and other financing sources
Property Taxes
Sales Taxes
Fees, Licenses and Permits
Charges for Services (Bureau)
Program Fees: Education
Intergovernmental grants
Transfer from General Fund
Proceeds from Bond Issues
$3,720,000
750,000
250,000
70,000
470,000
$ 250,000
2,500,000
$3,250,000
300,000
1,250,000
Budget continued on next page
Expenditures/expenses and other
financing uses:
General government operations
Public Safety
Education
Operating expenses (Bureau)
Capital Outlays
Transfers to other funds
1,500,000
1,400,000
1,250,000
850,000
2,750,000
3,000,000
1,875,000
5. On January 10, 2091, a cash grant of $450,000 was received from the
6. On January 31, 2091, $3,700,000 in property taxes were levied. Of
this, $111,000 (3% of property taxes) is estimated to be
7. On January 5, 2091 the engineering report ordered in December of
8. During 2091, the Province government placed orders amounting to
$940,000 for supplies. All the supplies ordered were received during
the year with an invoice price of $935,000 (there are no outstanding
9. During 2091 the Bureau of Electricity and Water placed orders
year end.
10. The Province Council approved the construction of a new school
building at an estimated cost of $2,750,000. The issuance of
11. On March 31, 2091, the Province government transferred $250,000 to
12. On April 1, 2091, $2,500,000 in 10 percent general obligation
long-term bonds were issued for $2,580,000. The premium of $80,000 was
13. On June 1, 2091, the school building contract was awarded to the
14. On November 30, 2091, the progress billings of $1,250,000 for the
school building were received from the contractor and $ 850,000 was
15. The Board of the Bureau of Electricity and Water approved the
16. On July 1, 2091, the office building contract was signed in the
17. On October 30, 2091, construction was completed and $632,500 was
paid on the contract. The remaining portion ($ 232,500) will be paid
18. At the end of November, ground transportation units were ordered
19. During 2091, the Province government received the following cash
collections:
20. Salaries and wages of $4,150,000 were incurred and paid by the
2091. Salaries and wages are classified by governmental functions as
follows:
Incurred
& Paid
21. During 2091, the Bureau of Electricity and Water billed the
Province government and the residents for electricity and water
services in the amounts of $920,000 and $2,120,000 respectively. The
Bureau estimated that 2% of the gross revenue from the residents will
22. $281,250 was removed from general government funds and set aside
23. On December 31, 2091, the Province government made principal
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24. As of December 31, 2091, physical inventories of supplies on hand
report the following:
25. On December 31, 2091, the Bureau of Electricity and Water accrued
26. The Province government and the Bureau of Electricity and Water
recorded depreciation for 2091 using the straight-line method. The new
27. On December 31, 2091 the Bureau of Electricity and Water borrowed
28. On December 31, 2091, $300,000 was borrowed on a 60 day note
29. The bond premium is amortized using the straight-line basis over
30. For purposes of classifying fund balances in the governmental
funds, assume:
• Supplies are the only nonspendable resource,
31. Prepare closing entries, where appropriate
Entries required for Government-wide
2
1. The fixed assets and debt acquired in Transaction 2 should be
4. Bond proceeds should be eliminated.
8. Expenditures for bond principal should be eliminated.
