Chapter 09 – Financial Reporting of State and Local Governments
9-14
Ch. 9, Solutions, Exercise 9-20 (Cont’d)
TRANS. FUND AMOUNTS
NO. OR ACTIVITY ACCOUNT TITLE Debits Credits
CASH 40,000
REVENUES—INVESTMENT EARNINGS 40,000
PF OFU—INTERFUND TRANSFERS OUT 40,000
CASH 40,000
5. EF DUE FROM OTHER FUNDS 125,000
CHARGES FOR SERVICES 125,000
Chapter 09 – Financial Reporting of State and Local Governments
9-15
Ch. 9, Solutions, Exercise 9-20 (Cont’d)
TRANS. FUND AMOUNTS
NO. OR ACTIVITY ACCOUNT TITLE Debits Credits
DUE TO OTHER FUNDS 124,000
CASH 124,000
6. ISF & GA INVENTORY OF SUPPLIES 4,500
CASH 4,500
7. GF CASH 1,988,000
TAXES RECEIVABLE—CURRENT 1,925,000
8. ISF DUE FROM OTHER FUNDS 23,800
Chapter 09 – Financial Reporting of State and Local Governments
9-16
Ch. 9, Solutions, Exercise 9-20 (Cont’d)
TRANS. FUND AMOUNTS
NO. OR ACTIVITY ACCOUNT TITLE Debits Credits
GF EXPENDITURES—GENERAL GOVERNMENT 15,700
DUE TO OTHER FUNDS 15,700
9. CPF CASH 5,000,000
OFS—PROCEEDS OF BONDS 5,000,000
10. GF ENCUMBRANCES 32,000
ENCUMBRANCES OUTSTANDING 32,000
Chapter 09 – Financial Reporting of State and Local Governments
9-17
Ch. 9, Solutions, Exercise 9-20 (Cont’d)
General Problem Information: Comprehensive set of transactions
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
9-21.
CITY OF ELIZABETH
Reconciliation of the Balance Sheet—Governmental Funds
to the Statement of Net Position
June 30, 20xx
Total fund balances—governmental funds $157,700
Amounts reported for governmental activities in the statement
of net position are different because:
Calculations:
Chapter 09 – Financial Reporting of State and Local Governments
9-18
Ch. 9, Solutions, Exercise 9-21 (Cont’d)
General Problem Information: Reconciliation of financial statements
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
9-22.
CITY OF EDWARD
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances—Governmental Funds to the Statement of Activities
December 31
Net change in fund balances—governmental funds $322,791
Amounts reported for the governmental activities in the statement
of activities are different because:
Governmental funds report capital outlays as expenditures.
However, in the statement of activities the cost of those assets is
Calculations:
Chapter 09 – Financial Reporting of State and Local Governments
9-19
Ch. 9, Solutions, Exercise 9-22 (Cont’d)
General Problem Information: Operating statements reconciliation
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Medium
9-23. 1. d. 6. e.
General Problem Information: Adjusting net position balances
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
Chapter 09 – Financial Reporting of State and Local Governments
9-20
Ch. 9, Solutions (Cont’d)
9-24.
ANNETTE COUNTY
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances—Governmental Funds to the Statement of Activities
For the Year Ended June 30, 20xx
Net change in fund balances—governmental funds $ (289,200)
Amounts reported for governmental activities in the statement
of activities are different because:
Governmental funds report capital outlays as expenditures.
However, in the statement of activities the cost of those assets
is allocated over their estimated useful lives as depreciation
expense. This is the amount by which capital outlays
$(2,750,000) exceeded depreciation $595,000. 2,155,000
Chapter 09 – Financial Reporting of State and Local Governments
9-21
Ch. 9, Solutions, Exercise 9-24 (Cont’d)
General Problem Information: Change in net position
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
9-25. Some of the modifications or corrections that should be made include:
• The word Expenses should be changed to Expenditures in the
statement title.
• An analysis should be done of the Other Governmental Funds column
to determine whether any of the three funds included in the column
Chapter 09 – Financial Reporting of State and Local Governments
9-22
Ch. 9, Solutions, Exercise 9-25 (Cont’d)
General Problem Information: Governmental fund financial statements
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Analyze
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
9-26. TOWN OF FREAZ
STATEMENT OF NET POSITION
AS OF JUNE 30, 2020
(000s OMITTED)
ASSETS:
CURRENT ASSETS:
CASH $ 3,639
INVESTMENTS 7,299
Chapter 09 – Financial Reporting of State and Local Governments
9-23
Ch. 9, Solutions, Exercise 9-26 (Cont‘d)
LIABILITIES:
CURRENT LIABILITES:
ACCOUNTS PAYABLE 7,764
ACCRUED LIABILITIES 4,765
DUE TO OTHER FUNDS (NET) 103
CURRENT PORTION OF LONG-TERM DEBT 8,600
TOTAL CURRENT LIABILITIES 21,232
LONG-TERM LIABILITIES:
Chapter 09 – Financial Reporting of State and Local Governments
9-24
Ch. 9, Solutions, Exercise 9-26 (Cont‘d) TOWN OF FREAZ
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2020
(000s OMITTED)
NET (EXPENSES)
REVENUES AND
CHANGES IN NET
PROGRAM REVENUES POSITION S
OPERATING CAPITAL
CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL
FUNCTIONS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES
PRIMARY GOVERNMENT:
GENERAL GOVERNMENT $ 2,468 $ 4,411 $ 307 $ 2,250
PUBLIC SAFETY 11,577 996 (10,581)
Chapter 09 – Financial Reporting of State and Local Governments
9-25
Ch. 9, Solutions, Exercise 9-26 (Cont’d)
General Problem Information: Government–wide financial statements
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
9-27.
MODIFIED ACCRUAL/ ADJUSTMENT
ACCOUNT AFFECTED ACCRUAL ACCOUNT Debit Credit
1. DEPRECIATION EXPENSE ACCRUAL 674,300
BUILDINGS & EQUIPMENT ACCRUAL 674,300
2. SALARY EXPENSE ACCRUAL 39,123
SALARIES PAYABLE ACCRUAL 39,123
3. BUILDINGS & EQUIPMENT ACCRUAL 29,049
Chapter 09 – Financial Reporting of State and Local Governments
9-26
Ch. 9, Solutions, Exercise 9-27 (Cont’d)
General Problem Information: Modified accrual to accrual accounting
Learning Objective: 9-5
Topic: Converting Accounting Information from the Modified Accrual to the Accrual
Basis of Accounting
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard