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
SRF CASH 40,000
OFS—INTERFUND TRANSFERS IN 40,000
GA INVESTMENTS—MARKETABLE
SECURITIES 800,000
GENERAL REVENUES—
CONTRIBUTIONS FOR ENDOWMENT 800,000
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
GA EXPENSES—GENERAL GOVERNMENT 125,000
INTERNAL BALANCES 125,000
INTERNAL BALANCES 124,000
CASH 124,000
7. GF CASH 1,988,000
TAXES RECEIVABLE—CURRENT 1,925,000
REVENUES 63,000
8. ISF DUE FROM OTHER FUNDS 23,800
BILLINGS TO DEPARTMENTS 23,800
EF EXPENSES—ADMINISTRATIVE 8,100
DUE TO OTHER FUNDS 8,100
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
GA INTERNAL BALANCES 8,100
PROGRAM REVENUE—GENERAL
GOVERNMENT—CHARGES FOR
SERVICES 8,100
GA CASH 5,000,000
BONDS PAYABLE 5,000,000
10. GF ENCUMBRANCES 32,000
ENCUMBRANCES OUTSTANDING 32,000
ENCUMBRANCES OUTSTANDING 32,000
EXPENDITURES 31,900
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
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:
Long-term liabilities, including bonds payable, are not due and
payable in the current period and therefore are not reported in
the funds. (188,200)
Calculations:
Capital assets used in governmental activities is calculated as capital assets minus
accumulated depreciation: $639,900-353,400=286,500
Long-term liabilities is calculated as the bond and long-term notes issues, the unamortized
bond premium, and compensated absences: $174,200+700+13,300=188,200
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
9-22.
CITY OF EDWARD
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances—Governmental Funds to the Statement of Activities
For the Year Ended December 31, 20XX
Net change in fund balances—governmental funds $322,791
Amounts reported for the governmental activities in the statement
of activities are different because:
Debt payments use financial resources of governmental funds,
but decrease long-term liabilities in the statement of net position. 100,000
Some expenses reported in the statement of activities do not
use current financial resources and are not reported as
expenditures in the governmental funds. (4,550)
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: Reconciling Items
9-23. 1. d. 6. a.
3. c. 8. c.
5. e. 10. b.
General Problem Information: Adjusting net position balances
Learning Objective: 9-4
Topic: Preparation of Basic Financial Statements
Bloom’s Taxonomy: Apply
Chapter 09 – Financial Reporting of State and Local Governments
9-20
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:
A sale of capital assets resulted in a gain on sale
reported in the statement of activities, whereas the
governmental funds reported the proceeds from the sale
as an other financing source.* (550,000)
Debt payments use current financial resources of governmental
funds, but retiring debt decreases long-term liabilities in the
statement of net position. 500,000
Some expenses reported in the statement of activities do not
require the use of current financial resources and therefore
are not reported as expenditures in the governmental funds. (24,000)
Revenues in the statement of activities that do not provide
current financial resources are not reported as revenues in
the funds. 364,600
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
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.
• A Total Governmental Funds column should be provided to the right of the
Other Governmental Funds column.
• Debt proceeds is not a revenue. It should be shown in a separate section titled
Other Financing Sources (Uses). This section appears after expenditures.
• Capital outlay should be shown separately from the functions of government.
Generally, information on capital outlays is shown after the functional
expenditures.
• The beginning and ending fund balances for the period should be included
after the Net Change in Fund Balances.
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
9-26. TOWN OF FREAZ
STATEMENT OF NET POSITION
AS OF JUNE 30, 2023
(000s OMITTED)
ASSETS:
CURRENT ASSETS:
CASH $ 3,639
INVESTMENTS 7,299
CAPITAL ASSETS:
LAND $ 8,720
OTHER CAPITAL ASSETS (NET OF DEPRECIATION)
INFRASTRUCTURE (NET $45,603) 40,165
BUILDINGS (NET $8,021) 17,659
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
LONG-TERM LIABILITIES:
BONDS PAYABLE 28,700
TOTAL LIABILITES 49,932
NET POSITION:
NET INVESTMENT IN CAPITAL ASSETS 44,179
RESTRICTED—DEBT SERVICE 2,210
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, 2023
(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)
PUBLIC WORKS 5,311 $ 1,680 (3,631)
GENERAL REVENUES:
PROPERTY TAXES LEVIED FOR GENERAL PURPOSES 13,665
INTEREST & PENALTIES ON DELINQUENT TAXES 746
INTEREST INCOME 345
TOTAL GENERAL REVENUES 14,756
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
9-27.
MODIFIED ACCRUAL/ ADJUSTMENT
ACCOUNT AFFECTED ACCRUAL ACCOUNT Debit Credit
2. SALARY EXPENSE ACCRUAL 39,123
SALARIES PAYABLE ACCRUAL 39,123
4. NOTES PAYABLE ACCRUAL 50,000
ACCRUED INTEREST
PAYABLE ACCRUAL 1,125
INTEREST EXPENSE ACCRUAL 1,125
EXPENDITURES—PRINCIPAL MODIFED ACCRUAL 50,000
EXPENDITURES—INTEREST MODIFIED ACCRUAL 2,250
5. INTERNAL BALANCES ACCRUAL 480
DUE FROM OTHER FUNDS MODIFED ACCRUAL 480
Chapter 09 – Financial Reporting of State and Local Governments
9-26
Ch. 9, Solutions, Exercise 9-27 (Cont’d)