Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions (Cont’d)
c. JEDVILLE TOWNSHIP—JOURNAL ENTRIES
GOVERNMENTAL ACTIVITIES
1. NO JOURNAL ENTRY REQUIRED
2. INVENTORY OF SUPPLIES 850,000
CASH 850,000
3. EXPENSES 780,000
5. INVENTORY OF SUPPLIES 860,000
CASH 860,000
6. EXPENSES 870,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-26 (Cont’d)
CONSUMPTION METHOD – 2019
Inventory of Supplies .
4/4/19 850,000
Fund Balance-Nonspendable .
12/31/19 70,000
Bal. 70,000
PURCHASES METHOD – 2019
Supplies Inventory .
Fund Balance-Nonspendable .
12/31/19 70,000
Bal. 70,000
GOVERNMENTAL ACTIVITIES – 2019
CONSUMPTION METHOD – 2020
Inventory of Supplies .
Bal. 70,000
Fund Balance-Nonspendable .
Beg. 70,000
12/31/20 10,000
Bal. 60,000
PURCHASES METHOD – 2020
Inventory of Supplies .
Fund Balance-Nonspendable .
Beg. 70,000
12/31/20 10,000
Bal. 60,000
GOVERNMENTAL ACTIVITIES – 2020
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-26 (Cont’d)
NOTE: Fund balance and net position balances are not required but can be used to
demonstrate that the net effects of each method on total fund balance and net
position are the same under all methods.
d. Under both the accrual accounting and the consumption method of
accounting for inventory, expenses and expenditures were equal to the
e. Under each method, the balance of Supplies Inventory will be $70,000 and
General Problem Information: Comparison of inventory methods
Learning Objective: 4-1, 4-2
Topic: Special Topics – Accounting for Supplies
Bloom’s Taxonomy: Apply
Accreditation Skills tag: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions (Cont’d)
4-27. a. CITY OF CASTLETON
JOURNAL ENTRIES FY 2020
Debits Credits
General Fund:
1. ESTIMATED REVENUES 3,140,000
General Fund:
2. CASH 490,000
EXPENDITURES⎯2020 10,000
TAX ANTICIPATION NOTES PAYABLE 500,000
3. TAXES RECEIVABLE⎯CURRENT 2,150,000
ALLOWANCE FOR UNCOLLECTIBLE
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 a. 3. (Cont’d)
Debits Credits
Governmental Activities:
TAXES RECEIVABLE⎯CURRENT 2,150,000
ALLOWANCE FOR UNCOLLECTIBLE
General Fund and Governmental Activities:
5. CASH 2,067,840
General Fund:
DEFERRED INFLOWS OF RESOURCES⎯
UNAVAILABLE REVENUES 106,840
REVENUES 106,840
General Fund:
6. INTEREST AND PENALTIES RECEIVABLE 3,430
Governmental Activities:
INTEREST AND PENALTIES RECEIVABLE 3,430
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 a. (Cont’d)
Debits Credits
General Fund:
General Fund and Governmental Activities:
8. ALLOWANCE FOR UNCOLLECTIBLE
General Fund:
9. EXPENDITURES⎯2020 819,490
DUE TO FEDERAL GOVERNMENT 166,400
General Fund:
10. EXPENDITURES⎯2020 62,690
DUE TO FEDERAL GOVERNMENT 62,690
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 a. (Cont’d)
Debits Credits
General Fund and Governmental Activities:
General Fund:
13. ENCUMBRANCES OUTSTANDING⎯2020 1,988,040
ENCUMBRANCES⎯2020 1,988,040
14. VOUCHERS PAYABLE 2,201,660
CASH 2,193,630
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, 4-27, a. (Cont’d)
Debits Credits
General Fund and Governmental Activities:
15. TAX ANTICIPATION NOTES PAYABLE 500,000
CASH 500,000
General Fund and Governmental Activities:
16. TAXES RECEIVABLE—DELINQUENT 189,000
(THIS ADJUSTS FOR THE NET PROPERTY TAXES [$189,000-64,500] AS WELL AS THE NET
INTEREST AND PENALTIES FROM ENTRY 6 [$2,401] THAT ARE NOT “AVAILABLE”.)
Governmental Activities:
No entry required – expenses are recorded periodically.
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, 4-27, a. (Cont’d)
Debits Credits
b. CLOSING ENTRIES, JUNE 30, 2020
General Fund:
APPROPRIATIONS 3,100,000
Governmental Activities:
(Not closed here since the governmental activities general ledger includes
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 (Cont’d)
c.
CITY OF CASTLETON
GENERAL FUND BALANCE SHEET
AS OF JUNE 30, 2020
ASSETS
CASH $ 468,640
TAXES RECEIVABLE⎯DELINQUENT $255,938
LESS: ALLOWANCE FOR UNCOLLECTIBLE
LIABILITIES AND FUND BALANCES
LIABILITIES:
VOUCHERS PAYABLE $127,390
DEFERRED INFLOWS OF RESOURCES—
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 (Cont’d)
d. CITY OF CASTLETON
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2020
REVENUES
TAXES $2,064,270
INTEREST AND PENALTIES ON TAXES 3,570
OTHER SOURCES 947,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 d. (Cont’d)
NOTE: The Governmental Activities general ledger is not shown here.
CITY OF CASTLETON
General Fund
General Ledger (Not Required)
Cash Interest and Penalties Rec.__ ____
7/1/2019 Bal. 276,120 (9) 618,690 7/1/2019 Bal. 6,280 (5) 3,570
(5) 2,067,840 (15) 500,000 6/30/2020 Bal 5,188
(11) 947,000
6/30/2020 Bal. 468,640
Taxes Receivable⎯Current Allow. for Uncoll. Interest & Penalties _
4-27(16) 189,000 (8) 952 (6) 1,029
6/30/2020 Bal. -0- 6/30/2020 Bal. 1,237
Allow. for Uncoll. Current Taxes Inventory of Supplies_________
4-27(16) 64,500 4-27(3) 64,500 7/1/2019 Bal. 6,100
Taxes Receivable⎯Delinquent
7/1/2019 Bal. 183,000 (5) 103,270
Allow. for Uncoll. Delinquent Taxes Vouchers Payable___________
7/1/2019 Bal. 21,960 (14) 2,201,660 7/1/2019 Bal 48,500
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-27 d. (Cont’d)
Due to Federal Government Revenues____________
(12) 258,580 7/1/2019 Bal. 29,490 (16) 126,901 (3) 2,085,500
Due to State Government Expenditures⎯2020_________
(12) 34,400 (9) 34,400 (2) 10,000 (14) 8,030
Deferred Inflows of Resources—
Tax Anticipation Notes Payable ____Unavailable Revenues _
(15) 500,000 (2) 500,000 7/1/2019 Bal. 166,160
Fund Balance—Nonspendable—
Fund Balance—Unassigned ____Inventory of Supplies _
Estimated Revenues ____ Encumbrances⎯2020__________
Appropriations Encumbrances Outstanding⎯2020___
Budgetary Fund Balance
(7) 80,000 (1) 40,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions (Cont’d)
4-28. a CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
GENERAL JOURNAL
FOR YEAR ENDED JUNE 30, 2020
Debits Credits
1. CASH 1,500,000
2. INVESTMENT IN BONDS 406,300
3. CASH 37,000
4. OTHER FINANCING USES—INTERFUND
5. INVESTMENT IN BONDS 3,300
REVENUES—CHANGE IN FAIR VALUE
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-28 a. (Cont‘d)
ADJUSTING ENTRIES: NONE REQUIRED.
CLOSING ENTRIES:
Debits Credits
REVENUES—CONTRIBUTIONS FOR
ENDOWMENT 1,500,000
REVENUES—CHANGE IN FAIR VALUE
b. (1) CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
BALANCE SHEET
AS OF JUNE 30, 2020
ASSETS
CURRENT ASSETS:
CASH $ 93,700
TOTAL CURRENT ASSETS 93,700
INVESTMENTS:
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
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Ch. 4, Solutions, Exercise 4-28 b. (Cont’d)
(2) CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE
FOR YEAR ENDED JUNE 30, 2020
REVENUES RECEIVED FOR CONTRIBUTION TO ENDOWMENT $1,500,000
REVENUES EARNED FOR TRANSFER TO
EXPENDABLE TRUST FUND:
c. The fund is a permanent fund, more specifically a public-purpose trust
General Problem Information: Permanent fund accounting
Learning Objective: 4-6
Topic: Permanent Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application; AICPA: Critical Thinking,
FN Reporting
Level of Difficulty: Medium