978-1259917059 Smithville Full Version Instruction Part 1

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For use with McGraw-Hill Education

Accounting for Governmental & Nonprofit Entities

18th Edition

By Jacqueline L. Reck and Suzanne L. Lowensohn

Instructions

City of Smithville

Full Version

Computerized Cumulative Problem

Table of Contents

Chapter 9 Adjusting and Closing Entries for Governmental Activities, Government-wide

Level; Preparation of Government-wide and Major Fund Financial Statements

………………………………………………………………………………………………………. 36

Chapter 10 Analysis of Financial Condition (Optional, unless assigned by your instructor)

………………………………………………………………………………………………………. 38

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Completing Chapters 2 through 11 of the City of Smithville Full

Version

Foreword

This full version of a cumulative problem written for the computer presents a series of

transactions covering activities for the City of Smithville, assuming the city utilizes the

dual-track accounting approach to the GASB reporting model described in Reck,

Lowensohn, and Neely, Accounting for Governmental & Nonprofit Entities, 18th edition.

The transactions presented relate to the city’s General Fund, capital projects, debt service,

enterprise, and fiduciary funds, as well as to an additional accounting entity,

governmental activities at the government-wide level. The transactions and instructions

in this series are designated Chapter 2, Chapter 3, etc., corresponding to the chapters of

Reck, Lowensohn, and Neely, Accounting for Governmental & Nonprofit Entities, 18th

edition.

complete each City of Smithville chapter as the corresponding chapter of the textbook is

covered. Conversely, students who procrastinate often find that the project takes more

time than they expected and that it is harder to recall how to make the journal entries

covered in the earlier chapters. Thus, delaying until your project is nearly due may

increase the total time it takes you to do the project and leave you little time for anything

city’s new accountant, it is your job to enter the city’s initial accounting information as of

December 31, 2019, in preparation for placing the new accounting system in full

operation effective January 1, 2020.

Required

First, be sure to read the User Guide to understand the general instructions on how to

problem.

To protect yourself from possible hard drive failure or corruption of your project data

file, we recommended that you save your file to not only your hard drive but also another

location (e.g., flash drive or the cloud), creating a backup file for your project at the end

of each session.

the Expenditures and Encumbrances accounts as expenditures occur only from a

single year’s appropriations.) You will not use all of the accounts listed for this

project.

b. The trial balance for the General Fund of the City of Smithville as of December 31,

You enter each account and amount one line at a time by clicking [Add]. The [Add]

button will not be active if information for the entry is missing (e.g., the transaction

description is missing.)

The year and transaction description need only be entered for the first line of the

journal entry; it will remain selected for the rest of the accounts. When you have

Interest and Penalties Receivable on Taxes 40,126

Allowance for Uncollectible Interest and Penalties 3,611

Due from Other Funds 12,000

Due from State Government 165,000

Inventory of Supplies 66,000

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Fund Balance—Committed—Public Works 29,700

Fund Balance—Assigned—Culture and Recreation 56,800

Fund Balance—Unassigned 323,698

Totals $1,051,172 $1,051,172

Unpost capability. As mentioned in the “User Guide” page, the City of Smithville

software program permits students to “unpost” a particular batch of posted

transactions. Unposted entries then can be edited and re-posted. In addition, any

will be used in the various chapters of the City of Smithville project.

d. Select the [Journal] tab and create a journal entry to enter the statement of net

position (i.e., balance sheet) accounts and amounts shown in the following trial

balance. It is necessary to enter these items in the accounts of the governmental

activities category at the government-wide level as the general journal and general

As of December 31, 2019

Account Title Debits Credits

Cash $ 376,290

Taxes Receivable—Delinquent 391,756

Allowance for Uncollectible Delinquent Taxes $ 11,752

Accumulated Depreciation—Buildings 1,731,000

Equipment 3,556,800

Accumulated Depreciation—Equipment 1,765,480

Vouchers Payable 272,187

Due to Federal Government 135,720

Before closing the City of Smithville it is recommended that you save a backup copy of

your work to another location by clicking on [File] and [Save As] for Windows and Mac.

Click on “Export my Project” if you are using the Chromebook version.

Chapter 3 Recording the Annual Budget

Charges for Services 624,720

Miscellaneous Revenues 91,300

Total Estimated Revenues $5,671,146

Appropriations:

General Government $1,169,500

selecting [General Fund] in the “Current accounting entity” dropdown menu

from the [Journal] tab. Click on the [Add new entry] to start your entry. In the

[Year] field, be sure to select the year 2020. Enter 3-a in the [Add description]

field. Select Estimated Revenues in the drop down [Account] window. Click [Add

subsidiary] to go to the Detail Journal where you will enter the detail for each

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

record the budget detail for Appropriations. To complete this entry debit or credit

Budgetary Fund Balance as appropriate to balance the budgetary entry.

To finish recording the budget debit Budgetary Fund Balance and credit Estimated

Other Financing Uses—Interfund Transfer Out for $17,500. Note that budgetary

entries have no effect on governmental activities at the government-wide level and

thus the budget information is only recorded in the General Fund.

When you are satisfied you have made the entries correctly, post them to the general

ledger by clicking on [Post entries]. Before posting, or after unposting as described

documents with budget information only. After operating transactions have been

journalized and posted in Chapter 4, subsidiary ledgers and trial balances will

contain both budgetary and operating accounts and balances.

Before closing the City of Smithville it is recommended that you save a backup copy of

your work to another location by clicking on [File] and [Save As] for Windows and Mac.

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Chapter 4 Recording Operating Transactions Affecting the General

Fund and Governmental Activities at the Government-wide Level

Presented below are a number of transactions for the City of Smithville that occurred

during fiscal year 2020, the year for which the budget given in Chapter 3 was recorded.

Read all instructions carefully.

a. After opening the data file containing your data from Chapters 2 and 3 of this project,

record the following transactions in the general journal for the General Fund and, if

applicable, in the general journal for governmental activities at the government-wide

level. For all entries, the date selected should be year 2020. For each of the

paragraphs that requires entries in both the General Fund and governmental activities

journals, you can either record them in both journals on a paragraph-by-paragraph

basis or, alternatively, record all the General Fund journal entries first for all

paragraphs, then complete the governmental activities journal entries for all

1. [Para. 4-a-1] On January 2, 2020, real property taxes were levied for the year in

the amount of $1,878,700. It was estimated that 2 percent of the levy would be

uncollectible.

2. [Para. 4-a-2] Encumbrances were recorded in the following amounts for purchase

orders issued against the appropriations indicated:

General Government $ 193,220

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Required: Record the encumbrances in the General Fund general journal and

Detail Journal as appropriate. In the Detail Journal, select “Purchase Orders” from

the drop down [Description] menu.

3. [Para. 4-a-3] Cash was received during the year in the total amount of $5,710,511

for collections from the following receivables and cash revenues, as indicated:

Current Property Taxes $1,488,206

Delinquent Property Taxes 387,201

Interest and Penalties Receivable on Taxes 34,270

Required: Record the receipt of cash and the related credits to receivables and

revenues accounts, as applicable, in both the General Fund and governmental

activities journals. (Select “Received in cash” in the drop down [Description]

menu in the Detail Journal related to the General Fund revenue entries.)

For purposes of the governmental activities entries at the government-wide level

Operating Grants and Contributions,

$344,000

Charges for Services Program Revenues—General Government—

Charges for Services, $250,126

Program Revenues—Public Safety—

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Miscellaneous General Revenues—Miscellaneous, $91,250

4. [Para. 4-a-4] Of the $387,201 in delinquent property taxes collected in

transaction 4-a-3, $85,549 had been recorded in the Deferred Inflows of

Resources account. Additionally, $7,540 of the interest and penalties collected in

5. [Para. 4-a-5] General Fund payrolls for the year totaled $4,401,482. Of that

amount, $660,222 was withheld for employees‘ federal income taxes; $472,193

for federal payroll taxes; $190,798 for employees’ state income taxes; $220,152

for retirement funds administered by the state government; and the remaining

6. [Para. 4-a-6] Invoices for some of the goods recorded as encumbrances in

transaction 4-a-2 were received and vouchered for later payment, as listed below.

Related encumbrances were canceled in the amounts shown (select “Elimination”

in the drop down [Description] menu in the Detail Journal):

Expenditures Encumbrances

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Required: Record the receipt of these goods and the related vouchers payable in

both the General Fund and governmental activities journals. At the government–

wide level, you should assume the city uses the periodic inventory method. Thus,

the invoiced amounts above should be recorded as expenses of the appropriate

functions, except that $38,340 of the amount charged to the Public Works

function was for a vehicle and $43,570 of the amount charged to the Culture and

Recreation function was for recreation equipment (debit Equipment for these

items at the government-wide level).

7. [Para. 4-a-7] During FY 2020, the City of Smithville received notification that

the state government would send $150,000 to it at the beginning of the next fiscal

year. Based on the city’s definition of “available for use,” the city considers the

8. [Para. 4-a-8] Checks were written in the total amount of $2,734,295 during 2020.

These checks were in payment of the following items:

Vouchers Payable $1,199,264

9. [Para. 4-a-9] Current taxes receivable uncollected at year-end, and the related

Allowance for Uncollectible Current Taxes account, were both reclassified as

delinquent. Of the amount classified as delinquent it was determined $87,010

would not be collected within 60 days of the fiscal year end and would therefore

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

reclassification of revenue, debit the revenue account and credit deferred inflows

of resources. Select “Deferral” in the [Description] menu in the Detail Journal.)

10. [Para. 4-a-10] The city’s budget for 2020 was legally amended as follows:

Estimated Revenues:

Decreases Increases

11. [Para. 4-a-11] Interest and penalties receivable on delinquent taxes was increased

by $40,500; $3,248 of this was estimated as uncollectible and based on past

12. [Para. 4-a-12] Services received by the General Government function of the

General Fund from the Solid Waste Disposal Fund amounted to $18,200 during

the year. Of this amount, $15,400 was paid in cash and $2,800 remained unpaid at

13. [Para. 4-a-13] Delinquent taxes receivable in the amount of $17,150 were written

off as uncollectible. Interest and penalties already recorded as receivable on these

14. [4-a-14] In December 2020, the General Fund transferred $17,500 to the Street

Improvement Bond Debt Service Fund to assist with an interest payment due on

15. [4-a-15] Adjusting Entry. A physical count of consumable supplies at year-end

showed an ending balance of $64,420, a decrease of $1,580 during the year. The

city uses the purchases method of accounting for its inventory in the General

Fund and the consumption method at the government-wide level. Since the city

16. Closing Entry. Following the instructions in the next paragraph, prepare and post

the necessary entries to close the General Fund Estimated Revenues,

Appropriations, and Estimated Other Financing Uses accounts to Budgetary Fund

Balance, and Revenues, Expenditures, and Other Financing Uses to Fund

Balance—Unassigned. Because the City of Smithville honors all outstanding

to the [Add credit] field. Be sure the checkmark in the box for [Closing Entry] is

showing as selected before closing each individual account. Also, you will be sent

to the Detail Journal where you must close each individual budgetary or operating

statement account. To determine the closing amounts for both General Ledger and

subsidiary ledger accounts, you will need to print the pre-closing version of these

Fund Balance—Restricted—Public Safety $36,000

Fund Balance—Committed—Health and Welfare 43,000

Fund Balance—Committed—Public Works 12,700

Fund Balance—Assigned—Culture and Recreation 0

Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL

c. Select [Export] from the drop down [File] menu to create an Excel worksheet of the

General Fund pre-closing subsidiary ledger account balances for the year 2020. Use

Excel to prepare in good form a statement of revenues, expenditures, and changes in

fund balance for the General Fund for the year ended December 31, 2020. (See

Illustration 4-5 in the textbook for an example format.)

[Note: File the printouts of all your worksheets and your completed financial

statements in your cumulative problem folder until directed by your instructor

to submit them, unless your instructor specifies submission of files electronically,

in which case you will need to save a .pdf version of you trial balances.]

Before closing the City of Smithville it is recommended that you save a backup copy of

distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in

whole or part.

Chapter 5 Recording Capital Asset Transactions

Street Improvement Capital Projects Fund and Governmental Activities at the

Government-wide Level

During late 2019, the voters of the City of Smithville authorized tax-supported bond

issues totaling $8,000,000 as partial financing for projects to construct the extension of

two streets and the related curbs, culverts, and storm sewers in the city. The estimated

total cost of the projects, which are expected to extend over the next three years, was

$11,200,000. In addition to the bond financing, voters also approved a special 1 cent sales

tax to assist in financing the projects. The sales tax begins January 1, 2020 and will

continue for seven years. The sales tax is projected to generate $550,000 each year.

Required

a. Prepare general journal entries as necessary to record the transactions described

1. [Para. 5-a-1] In early 2020, design plans and specifications for the first project,

the Elm Street Project, were submitted by a construction engineering firm. The

2. [Para. 5-a-2] On February 20, 2020, the city signed a $40,000, 90-day tax

3. [Para. 5-a-3] A $235 purchase order for advertisements soliciting bids for the

Elm Street Project was issued March 1, 2020. The bill for advertising in the

4. [Para. 5-a-4] On March 15, 2020, construction bids were opened and analyzed. A

bid of $2,400,000 was accepted, and the contract was awarded for the Elm Street

5. [Para. 5-a-5] Sales tax revenue of $240,000 was received.

2020.

7. [Para. 5-a-7] On April 1, 2020, 2.5% deferred serial bonds with a face value of

$2,000,000 were sold for a total amount of $2,032,500, of which $12,500 was for

accrued interest from the January 1, 2020 date of the bonds and $20,000 was a

premium on the bonds sold. Cash in the amount of the accrued interest and

8. [Para. 5-a-8] The city repaid the $40,000 tax anticipation note plus interest of

$300 ($40,000 X 0.03 X 90/360) (see transaction 2).