Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-21
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
Debits Credits
3. Internal Service Fund:
SALARIES AND WAGES EXPENSE 235,000
4. Internal Service Fund:
UTILITIES EXPENSE 30,000
5. Internal Service Fund:
DEPRECIATION EXPENSE⎯BUILDING 10,000
DEPRECIATION EXPENSE⎯MACHINERY
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-22
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
Debits Credits
6. Internal Service Fund:
Governmental Activities: No entry necessary since the billings were between
governmental funds and the internal service fund.
7. Internal Service Fund:
Governmental Activities: No entry necessary since the cash exchange was
between governmental funds and the internal service fund.
8. Internal Service Fund & Governmental Activities:
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-23
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
Debits Credits
9. Internal Service Fund:
Closing Entries:
BILLINGS TO DEPARTMENTS 397,000
COST OF SUPPLIES ISSUED 110,000
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-24
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
b. CITY OF ASHVILLE
CENTRAL GARAGE FUND
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN FUND NET POSITION
FOR CURRENT FISCAL YEAR
BILLINGS TO DEPARTMENTS $397,000
OPERATING EXPENSES:
COST OF SUPPLIES ISSUED $110,000
SALARIES AND WAGES EXPENSE 235,000
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-25
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
c. CITY OF ASHVILLE
CENTRAL GARAGE FUND
STATEMENT OF NET POSITION
ASSETS:
CURRENT ASSETS:
CASH $135,000
DUE FROM OTHER FUNDS 12,000
INVENTORY OF SUPPLIES 72,000
TOTAL CURRENT ASSETS $219,000
CAPITAL ASSETS:
LIABILITIES:
VOUCHERS PAYABLE 16,000
DUE TO OTHER FUNDS 3,000
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-26
Ch. 7, Solutions, Exercise 7-20 (Cont’d)
d. For the government-wide statement of activities, the internal service fund
would be reported as a part of the Governmental Activities column. Since
the only funds served by the Central Garage Fund are governmental
General Problem Information: Central Garage ISF – City of Ashville
Learning Objective: 7-4
Topic: Internal Service Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-27
Ch. 7, Solutions (Cont’d)
7-21.
INGLIS CITY
INTERNAL SERVICE FUND
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $2,915,500
CASH PAID TO SUPPLIERS $(1,642,100)
CASH PAID TO EMPLOYEES (479,300)
CASH PAID TO OTHER (89,200) (2,210,600)
NET CASH PROVIDED BY OPERATIONS $704,900
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-28
Ch. 7, Solutions, Exercise 7-21 (Cont’d)
General Problem Information: Enterprise fund statement of cash flows
Learning Objective: 7-2
Topic: Proprietary Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
7-22. a. CITY OF SALTWATER BEACH
TRIBUTE AQUATIC CENTER FUND
STATEMENT OF REVENUE, EXPENSES, AND
CHANGES IN FUND NET POSITION
FOR THE CURRENT YEAR ENDED
OPERATING INCOME:
CHARGES FOR SERVICES $2,040,000
OPERATING EXPENSES:
PERSONNEL EXPENSE $1,034,000
UTILITIES EXPENSE 188,500
REPAIRS AND MAINTENANCE EXPENSE 82,100
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-29
Ch. 7, Solutions, Exercise 7-22 (Cont’d)
b. CITY OF SALTWATER BEACH
TRIBUTE AQUATIC CENTER FUND
STATEMENT OF NET POSITION
AS OF YEAR END
ASSETS:
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 182,240
ACCOUNTS RECEIVABLE 5,225
CAPITAL ASSETS:
LAND 1,400,000
BUILDINGS AND EQUIPMENT $ 925,000
LESS: ALLOW. FOR DEPRECIATION (41,625) 883,375
LIABILITIES:
CURRENT LIABILITIES:
ACCOUNTS & ACCRUED PAYABLES 22,150
CURRENT PORTION OF LONG-TERM DEBT 281,600
TOTAL CURRENT LIABILITIES 303,750
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-30
Ch. 7, Solutions, Exercise 7-22 (Cont’d)
c. CITY OF SALTWATER BEACH
TRIBUTE AQUATIC CENTER FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $2,038,355
CASH PAID TO:
CASH PAID TO PERSONNEL $(1,038,800)
CASH PAID TO UTILITIES (185,800)
CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:
PROCEEDS FROM SALE OF CAPITAL ASSETS 9,250
PRINCIPAL PAID ON CAPITAL DEBT (281,600)
INTEREST PAID ON CAPITAL DEBT (323,840)
NET CASH USED BY FINANCING ACTIVITIES (596,190)
CASH FLOWS FROM INVESTING ACTIVITIES:
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
7-31
Ch. 7, Solutions, Exercise 7-22, part c (Cont’d)
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATIONS
OPERATING INCOME $531,240
ADJUSTMENTS:
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)
7-23.
TOWN OF FALMOUTH
SKATING RINK ENTERPRISE FUND
PARTIAL STATEMENT OF NET POSITION
AS OF YEAR END
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:
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-33
Ch. 7, Solutions, Exercise 7-23 (Cont’d)
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
7-24. a. TOWN OF ELIZABETH
CENTRAL STATION FUND
GENERAL JOURNAL
Debits Credits
1. ACCOUNTS RECEIVABLE 94,444
2. ADMINISTRATIVE SERVICES EXPENSE 25,205
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, Exercise 7-24 a. (Cont’d)
Debits Credits
5. RENTAL SALES 94,444
INTERFUND TRANSFER IN 60,000
ADMINISTRATIVE SERVICES EXPENSE 25,205
b.
TOWN OF ELIZABETH
CENTRAL STATION FUND
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED
OPERATING REVENUES:
RENTAL INCOME $ 94,444
OPERATING EXPENSES:
ADMINISTRATIVE SERVICES $ 25,205
MAINTENANCE AND REPAIR 72,882
SUPPLIES AND MATERIALS 7,792