978-1259917059 Smithville Short Version Instruction Part 2

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

the state government would send $150,000 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 $2,096,571 during 2020.

These checks were in payment of the following items:

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

10. [Para. 4-a-10] Interest and penalties receivable on delinquent taxes was increased

by $40,500; $3,248 of this was estimated as uncollectible and $8,910 was

considered unavailable for use in the current fiscal year.

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

the necessary entries to close the General Fund Estimated Revenues and

Appropriations accounts to Budgetary Fund Balance, and Revenues and

Expenditures to Fund Balance—Unassigned. Because the City of Smithville

honors all outstanding encumbrances at year-end, it is not necessary to close

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

ledgers for year 2020 from the [Reports] menu.

At year-end, an analysis by the city’s finance department determined the

Fund Balance—Assigned—Culture and Recreation 0

Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL

ACTIVITIES AT THIS TIME since governmental activities will not be closed

until Chapter 9, after the capital projects fund (Chapter 5) and debt service fund

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.)

d. Use the Excel worksheet of the General Fund pre-closing subsidiary ledger account

balances created in part c above to prepare in good form a schedule of revenues,

electronically.]

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 Chromebook.

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

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

below in the Street Improvement Fund general journal and, if applicable, in the

governmental activities general journal. Do not record entries at this time in other

affected funds; those entries will be made in the later chapters of this cumulative

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 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

3. [Para. 5-a-3] 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

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

whole or part.

Fund. Cash in the amount of $2,000,000 was deposited and recorded in the Street

Improvement Fund.

Required: Record this transaction in the Street Improvement Fund and

governmental activities journals. (Hint: In addition to recording the liability for

bonds payable in the governmental activities journal, you should record the

premium on the bonds payable [credit Premium on Deferred Serial Bonds

Payable] and accrued interest on bonds sold [we recommend that you credit

Expenses—Interest on Long-term Debt] in the governmental activities general

journal for the $12,500 of accrued interest.) For now you should not make the

entry in the Street Improvement Bond Debt Service Fund to record the accrued

interest and premium. That entry will be made in Chapter 6 of this cumulative

problem.

4. [Para. 5-a-4] Vouchers payable (see Transaction 1) were paid on April 20, 2020.

5. [Para. 5-a-5] In July 2020, the contractor for the Elm Street Project reported that

the project was one-half completed and requested a progress payment of

6. [Para. 5-a-6] The billing for the partially completed Elm Street Project (see

7. [Para. 5-a-7] On December 10, 2020 the Elm Street Project was completed and

the contractor for the project requested a final payment of $1,200,000. This

8. [Para. 5-a-8] During the year sales taxes were collected in the amount of

$560,000.

9. [Para. 5-a-9] Payment was made for the final billing on the Elm Street Project,

10. [Para. 5-a-10] Upon final inspection of the Elm Street Project, the city inspector

determined that all work conformed to specifications. Retained percentages

11. Verify the accuracy of all your preceding entries in the Street Improvement Fund

and governmental activities general journals, then click [Post entries] of each

entity to post the entries to the respective general ledgers. For the Street

Improvement Fund only, prepare year-end closing entries for 2020 and post them

2020. (See Illustration 4-4 in the textbook for an example of an appropriate format of

a governmental fund balance sheet.) In addition, save and print the post-closing trial

balance from the [Reports] drop-down menu.

d. Export the pre-closing trial balance for year 2020 to an Excel worksheet and use

Excel to prepare a statement of revenues, expenditures, and changes in fund balance

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 Chromebook.

Chapter 6 Transactions Affecting General Long-term Liabilities and

Debt Services

after the date of the bonds (January 1, 2025), and $100,000 is to mature January 1 of each

year thereafter until all the bonds have been retired. Thus, these bonds are deferred serial

bonds as discussed in Chapter 6 of the textbook. Make entries as instructed in the

following paragraphs.

Bond covenants related to this bond issue require the city to levy property taxes sufficient

2021. As the bond issue did not occur until April 2020, the city will not levy debt service

property taxes until next year.

1. [Para. 6-a-1] In early April 2020, an amendment to the annual budget for 2020

was approved by the city council for inflows and outflows in the Street

Improvement Bond Debt Service Fund related to the bond issue. The debt service

2. [Para. 6-a-2] On April 1, 2020, the premium and accrued interest on bonds sold

were received by the Street Improvement Bond Debt Service Fund. (See

3. [Para. 6-a-3] The July 1, 2020 interest payment was made in the amount of

$25,000. (Note: Since you credited Expense—Interest on Long-Term Debt for

$12,500 in 5-a-3 in the governmental activities general journal you can record the

full July 1, 2020, interest payment as a debit to Interest Expense, less amortization

4. [Para. 6-a-4] Make the required journal entry in the governmental activities

general journal to accrue six months of interest payable on the 2.5% deferred

5. Verify the accuracy of journal entries, including dates and paragraph numbers,

and, if you have not already done so, post all entries to the general ledger of both

the Street Improvement Bond Debt Service Fund and governmental activities by

clicking on [Post entries]. Make the entries needed to close the budgetary and

operating statement accounts at the end of fiscal year 2020. Budgetary and

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

whole or part.

b. Go to [File>Export] and export Excel files of the pre-closing and post-closing trial

balances for the Street Improvement Bond Debt Service Fund as of December 31,

2020, and use them to prepare a balance sheet; statement of revenues, expenditures,

and changes in fund balances; schedule of revenues, expenditures, and changes in

fund balances—budget and actual for the Street Improvement Bond Debt Service

Fund. The format for the statements will be similar to that of the combing statements

in illustrations 6-8, 6-9, and 6-10.

[Note: Retain all required printouts in your cumulative folder until directed by

limit, debt subject to the limit, and debt margin at the end of 2020 (see Illustration 6-3

for an example). A note at the bottom of the schedule should disclose the bonds

authorized but unissued, as described in the introductory paragraph of Chapter 5 of

the City of Smithville cumulative problem. This will inform the reader that additional

debt issuances are pending.

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

whole or part.

Chapter 9 Adjusting and Closing Entries for Governmental Activities,

Government-wide Level; Preparation of Government-wide

and Major Fund Financial Statements

a. Prior to preparing financial statements at the end of FY 2020, it is necessary to record

depreciation expense for the year for governmental activities at the government-wide

level.

Based on general capital assets assigned to specific functions, depreciation expense

related to equipment and infrastructure is allocated to functions as shown below:

Equipment Infrastructure Buildings

General Government $ 54,920 $45,336

Public Safety 187,840 66,115

Public Works 125,596 $ 98,620 49,114

Culture and Recreation 72,244 28,335

Totals $440,600 $ 98,620 $188,900

Net Position—Restricted for Capital Projects (see Capital Projects Fund to calculate

net position). (Note: Due to the need to deduct accrued interest on long-term debt

in calculating the December 31, 2020 balance of Net Position—Restricted for

Debt Service you will end up with no restriction on net position for debt service.)

For each account to be closed or reclassified, be sure and click on the check mark for

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

whole or part.

Smithville is a primary government and has no other organizations for which it is

accountable as component units.)

—The End—