Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-35
Ch. 7, Solutions, Exercise 7-24 (Cont’d)
c. No. The explanation notes that 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 Central Station Fund is not currently
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
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-36
Ch. 7, Solutions (Cont’d)
7-25. a. CITY OF BAY LAKE
WATER UTILITY FUND
GENERAL JOURNAL
Debits Credits
2. ACCOUNTS RECEIVABLE 2,788,691
3. CASH 260,000
4. MANAGEMENT & ADMINISTRATION EXPENSE 360,408
5. CASH—RESTRICTED 2,427
CUSTOMER DEPOSITS 2,427
6. CASH 2,943,401
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-37
Ch. 7, Solutions, Exercise 7-25 (Cont’d)
Debits Credits
7. ACCOUNTS PAYABLE 1,462,596
INTEREST PAYABLE 131,772
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, Exercise 7-25 (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
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-39
Ch. 7, Solutions, Exercise 7-25 (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, 2020
OPERATING INCOME:
SALES OF WATER (NET OF $14,913 PROVISION
FOR UNCOLLECTIBLE ACCOUNTS) $3,167,644
OPERATING EXPENSES:
NONOPERATING REVENUE/EXPENSES:
INTEREST INCOME 193,849
INTEREST EXPENSE ( 325,551)
TOTAL NONOPERATING INCOME (EXPENSE) (131,702)
INCOME BEFORE TRANSFERS & CONTRIBUTIONS 691,062
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-40
Ch. 7, Solutions, Exercise 7-25 (Cont’d)
c. CITY OF BAY LAKE
WATER UTLITY FUND
STATEMENT OF NET POSITION
JUNE 30, 2020
ASSETS:
CURRENT ASSETS:
CASH AND INVESTMENTS $ 1,811,482
ACCOUNTS RECEIVABLE (NET OF $18,267
PROVISION FOR UNCOLLECTIBLE ACCOUNTS) 346,777
CAPITAL ASSETS:
LAND $1,780,945
BUILDINGS (NET OF $3,660,053 IN
ACCUMULATED DEPRECIATION 4,974,354
LIABILITIES:
CURRENT LIABILITIES:
LIABILITIES PAYABLE FROM RESTRICTED ASSETS:
CUSTOMER DEPOSITS 10,708
LONG-TERM LIABILITIES:
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-41
Ch. 7, Solutions, Exercise 7-25 (Cont’d)
d. CITY OF BAY LAKE
WATER UTILITY FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2020
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
CASH FLOWS FROM CAPITAL & RELATED FINANCING
ACTIVITIES:
PROCEEDS FROM CAPITAL GRANT 475,000
PUCHASE OF MACHINERY & EQUIPMENT (583,425)
SHEET
END BEGINNING
OF YEAR OF YEAR
CASH AND CASH EQUIVALENTS IN CURRENT
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-42
Ch. 7, Solutions, Exercise 7-25, part d (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)
7-26.
VILLAGE OF SHELBURNE
GOLF COURSE ENTERPRISE FUND
PARTIAL STATEMENT OF NET POSITION
AS OF YEAR END
NET POSITION:
NET POSITION—NET INVESTMENT IN CAPITAL ASSETS $ 594,300
NET POSITION—RESTRICTED 5,000
NET POSITION—UNRESTRICTED 407,401
TOTAL NET POSITION $1,006,701
Calculations
Net investment in capital assets:
Beginning balance $585,400
+ Leased equipment 200,000
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-44
Ch. 7, Solutions, Exercise 7-26 (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
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-45
Ch. 7, Solutions (Cont’d)
7-27.
CUMBERLAND COUNTY
ENTERPRISE FUND
STATEMENT OF CASH FLOWS
FOR THE CURRENT YEAR ENDED
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $112,793
CASH PROVIDED FROM CUSTOMER DEPOSITS 1,400
CASH PAID TO VENDORS $(19,981)
CASH PAID TO EMPLOYEES (35,250) (55,231)
NET CASH PROVIDED BY OPERATIONS $ 58,962
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-46
Ch. 7, Solutions, Exercise 7-27 (Cont’d)
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE
SHEET
END BEGINNING
OF YEAR OF YEAR
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
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
7-47
7-28. a. (Revised July 2019 see Errata sheet under instructor resources)
BROWN COUNTY
SOLID WASTE FUND
GENERAL JOURNAL
Debits Credits
1. INTEREST ON LONG-TERM DEBT 6,702,000
AMORTIZATION OF BOND PREMIUM 167,000
3. INVESTMENTS 3,952,000
4. PROVISION FOR UNCOLLECTIBLE ACCOUNTS 45,000
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS 45,000
5. PROVISION FOR LANDFILL CLOSURE
AND POSTCLOSURE 1,800,000
ACCRUED LANDFILL CLOSURE AND
Chapter 07 – Accounting for the Business-type Activities of State and Local Governments
yards in the landfill already used to total cubic yards available in the
landfill.
c. The funds set aside to meet closure and postclosure obligations would be
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