Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–31
Ch. 7, Solutions, 7-19 (Cont’d)
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATIONS
OPERATING INCOME $ 531,240
ADJUSTMENTS:
DEPRECIATION EXPENSE 136,960
General Problem Information: Tribute Aquatic Center Enterprise Fund
Learning Objective: 7-5
Topic: Enterprise Funds
Bloom’s Taxonomy: Remember
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Hard
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–32
Ch. 7, Solutions (Cont’d)
7-20.
TOWN OF FALMOUTH
SKATING RINK ENTERPRISE FUND
PARTIAL STATEMENT OF NET POSITION
AS OF DECEMBER 31, 2017
NET POSITION:
NET POSITION—NET INVESTMENT IN CAPITAL ASSETS $ 834,700
Calculations
Net investment in capital assets:
Beginning balance $679,800
– Depreciation 54,000
NOTE: The construction in progress would also increase net investment in capital assets, but it is
decreased by the same amount of outstanding debt ($248,000).
Restricted:
Beginning balance $ 0
+ Restricted for construction ($500,000-248,000) 252,000
Ending balance $252,000
Unrestricted:
Beginning balance $1,354,692
Ch. 7, Solutions, 7-20 (Cont’d)
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–33
General Problem Information: Net Position Classifications
Learning Objective: 7-5
Topic: Enterprise Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
7-21. a. TOWN OF ELIZABETH
CENTRAL STATION FUND
GENERAL JOURNAL
Debits Credits
1. ACCOUNTS RECEIVABLE 94,444
RENTAL SALES 94,444
CASH 90,210
ACCOUNTS RECEIVABLE 90,210
3. CASH 60,000
INTERFUND TRANSFER IN 60,000
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–34
Ch. 7, Solutions, 7-21 a. (Cont’d)
Debits Credits
5. RENTAL SALES 94,444
INTERFUND TRANSFER IN 60,000
ADMINISTRATIVE SERVICES EXPENSE 25,205
MAINTENANCE & REPAIRS EXPENSE 72,882
b.
TOWN OF ELIZABETH
CENTRAL STATION FUND
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
OPERATING REVENUES:
RENTAL INCOME (NET $667 PROVISION
FOR UNCOLLECTIBLE ACCOUNTS) $ 93,777
OPERATING EXPENSES:
ADMINISTRATIVE SERVICES $ 25,205
MAINTENANCE AND REPAIR 72,882
Ch. 7, Solutions, 7-21 (Cont’d)
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–35
c. No. There is no payment of interest by the Central Station Fund, so it would
appear there is no long-term debt. Thus, the activity of the fund is not
financed with debt secured by the Central Station Fund’s revenues. The
d. As manager, you may want to know what, if any, circumstances resulted in
such a sizable operating loss. For example, were there a large number of
vacancies, and if so, why? Traditionally, what type of support has the
General Problem Information: Town of Elizabeth Central Station Fund
Learning Objective: 7-5
Topic: Section from Chapter
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Hard
Ch. 7, Solutions (Cont’d)
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–36
7-22. a. CITY OF BAY LAKE
WATER UTILITY FUND
GENERAL JOURNAL
Debits Credits
1. SALES OF WATER 500,000
ACCRUED UTILITY REVENUE 500,000
2. ACCOUNTS RECEIVABLE 2,788,691
DUE FROM GENERAL FUND 193,866
SALES OF WATER 2,982,557
7–37
7. ACCOUNTS PAYABLE 1,462,596
INTEREST PAYABLE 131,772
8. CASH 475,000
CONTRIBUTION—CAPITAL GRANT 475,000
9. ACCUMULATED PROVISION FOR UNCOLLECTIBLE
10. INTERFUND TRANSFER OUT 800,000
CASH 800,000
11. DEPRECIATION EXPENSE 600,132
UNCOLLECTIBLE ACCOUNTS 14,913
INTEREST EXPENSE 61,406
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–38
Ch. 7, Solutions, 7-22 (Cont’d)
Debits Credits
ACCRUED UTILITY REVENUE 700,000
13. SALES OF WATER 3,182,557
INTEREST INCOME 193,849
CONTRIBUTION—CAPITAL GRANT 475,000
MANAGEMENT & ADMINISTRATION EXPENSE 360,408
*Net investment in capital assets was increased by the purchase of
$583,425 of machinery and equipment and a $400,000 decrease in the
revenue bonds. The account was decreased by $600,132 in depreciation.
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–39
Ch. 7, Solutions, 7-22 (Cont’d)
b. CITY OF BAY LAKE
WATER UTILITY FUND
STATEMENT OF REVENUE, EXPENSES, AND
CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017
OPERATING INCOME:
SALES OF WATER (NET OF $14,913 PROVISION
FOR UNCOLLECTIBLE ACCOUNTS) $3,167,644
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–40
Ch. 7, Solutions, 7-22 (Cont’d)
c. CITY OF BAY LAKE
WATER UTLITY FUND
STATEMENT OF NET POSITION
JUNE 30, 2017
ASSETS:
CURRENT ASSETS:
CASH AND INVESTMENTS $ 1,811,482
ACCOUNTS RECEIVABLE (NET OF $18,267
PROVISION FOR UNCOLLECTIBLE ACCOUNTS) 346,777
ACCRUED UTILITY REVENUE 700,000
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–41
Ch. 7, Solutions, 7-22 (Cont’d)
d. CITY OF BAY LAKE
WATER UTILITY FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $2,943,401
CASH PAID TO:
EMPLOYEES AND SUPPLIERS ( 1,462,596)
NET CASH PROVIDED BY OPERATIONS 1,480,805
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE
SHEET
END BEGINNING
OF YEAR OF YEAR
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–42
Ch. 7, Solutions, 7-22 (Cont’d)
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATIONS
OPERATING INCOME $ 822,764
ADJUSTMENTS:
DEPRECIATION EXPENSE 600,132
UNCOLLECTIBLE ACCOUNTS 4,900
General Problem Information: City of Bay Lake Water Utility Fund
Learning Objective: 7-5
Topic: Enterprise Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Hard
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–43
Ch. 7, Solutions (Cont’d)
7-23.
INGLIS CITY
ENTERPRISE FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $2,915,500
CASH PAID TO:
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
GRANT FROM STATE 50,000
TRANSFER TO GENERAL FUND (25,000)
NET CASH PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES 25,000
Ch. 7, Solutions, 7-23 (Cont’d)
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–44
General Problem Information: Enterprise fund statement of cash flows
Learning Objective: 7-5
Topic: Proprietary Funds
Bloom’s Taxonomy: Apply
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
7-24. a. BROWN COUNTY
SOLID WASTE FUND
GENERAL JOURNAL
Debits Credits
1. INTEREST ON LONG-TERM DEBT 6,702,000
AMORTIZATION OF BOND PREMIUM 167,000
CASH 6,869,000
CONSTRUCTION WORK IN PROGRESS 214,000
Ch. 7, Solutions, 7-24 (Cont’d)
Chapter 07 – Accounting for the Business–type Activities of State and Local Governments
7–45
b. Yes, the county is complying with GASB standards for recognition of
closure and postclosure care costs. The county is recognizing an expense
c. The funds set aside to meet closure and postclosure obligations would be
shown as Amounts Held by Trustee in the Restricted Assets section of the
General Problem Information: Appendix – Solid Waste Enterprise Fund
Learning Objective: 7-6
Topic: Appendix – Accounting for Municipal Solid Waste Landfills
Bloom’s Taxonomy: Analyze
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium Hard