For use with McGraw Hill
Accounting for Governmental & Nonprofit Entities
19th Edition
By Jacqueline L. Reck, Suzanne L. Lowensohn, and Daniel G. Neely
Instructions
City of Bingham
Full Version
Computerized Cumulative Problem
2
Table of Contents
Completing Chapters 2 through 11 of the City of Bingham ………………………………….. 3
Chapter 2 Opening the Books ……………………………………………………………………………… 3
Chapter 3 Recording the Annual Budget …………………………………………………………….. 8
Chapter 4 Recording Operating Transactions Affecting the General Fund and
Governmental Activities at the Government-wide Level ……………………… 10
Chapter 5 Recording Capital Asset and Capital Project Transactions ………………… 18
Chapter 6 Transactions Affecting General Long-Term Liabilities and Debt Service
………………………………………………………………………………………………………….. 22
Chapter 7 Recording Transactions Affecting the Enterprise Fund and Business–
Type Activities …………………………………………………………………………………… 27
Chapter 8 Recording Fiduciary Fund Transactions—A Tax Custodial Fund ……… 31
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
Chapter 11 Preparation of Audit Report (Optional, unless assigned) ………………….. 38
3
Completing Chapters 2 through 11 of the City of Bingham
This version of a cumulative automated problem presents a series of transactions,
covering activities of the City of Bingham, assuming the city utilizes the dual-track
accounting approach to the GASB governmental reporting model described in Reck,
Lowensohn, and Neely, Accounting for Governmental and Nonprofit Entities, 19th
Edition. The transactions presented relate to the city’s General, 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 and Nonprofit Entities,
19thEdition.
To minimize errors, you should read and follow all instructions carefully. Students find
that this computerized cumulative problem significantly enhances their learning if they
complete each City of Bingham chapter as the corresponding chapter of the textbook is
covered. Conversely, students who procrastinate often find that the project takes much
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 the deadline for your project
is nearly due may increase the total time it takes you to do the project and leave you little
time for anything else that week. So, our advice is to stay current with the project.
Chapter 2 Opening the Books
funds used by the City of Bingham that you will use in Chapters 5-9 of the problem. To
begin this case, you must enter the city’s initial accounting information as of December
31, 2022, so that all transactions can be recorded for the next fiscal year beginning
January 1, 2023.
Required
First, be sure to read the User Guide to understand the general instructions on how to
navigate and use this application.
To protect yourself from possible hard drive failure or loss of your project data file, we
recommend that you save your file to not only your hard drive but also another location
(e.g., the cloud), creating a dated backup file for your project at the end of each session.
To open an existing project, click on “Open Project” in the opening window or select
the project from the “Recent projects” list.
a. If it is not already displayed, select [General Fund] in the “Current accounting
entity” window and the [Accounts] tab. Clicking on the [Accounts] tab allows you
to see the chart of accounts that will be used for the [General Fund]. A different
b. The trial balance for the General Fund of the City of Bingham as of December 31,
2022, is shown on the following page. Select the [Journal] tab and create a journal
entry to enter the balance sheet accounts and amounts shown in the trial balance. To
create an entry start by clicking on [Add new entry]. Select the desired account
name from the drop down [Account] window. Be sure to enter 2022 from the drop-
5
down [Year] menu and enter the paragraph number from these instructions in the
[Add description] box of the [Journal]. For this entry you should enter 2b. Select
the appropriate accounts individually and insert the appropriate amounts. (Note:
Enter all dollar amounts without dollar signs, commas, and decimal points. All
amounts in this project should be rounded to the nearest whole dollar. For all
entries, it is vitally important that the correct year be selected.)
CITY OF BINGHAM
General Fund
Post-closing Trial Balance
As of December 31, 2022
Account Title Debits Credits
Cash $ 742,125
Taxes Receivable—Delinquent 426,250
Allowance for Uncollectible Delinquent Taxes $ 36,231
Interest and Penalties Receivable on Taxes 28,772
Allowance for Uncollectible Interest and Penalties 2,589
Sales Taxes Receivable 14,132
Vouchers Payable 260,210
Unpost capability. As mentioned in the “User Guide” page, the City of Bingham
software program permits students to “unpost” a particular batch of posted
transactions. Unposted entries then can be edited and reposted. In addition, any
omitted entries can be inserted above a selected journal line in any unposted batch of
entries. Prior to unposting a batch all batches must be posted.
6
Select [Reports>Trial Balances>Post-Closing Trial Balance] and print or save as
a .pdf file the post-closing trial balance for year 2022. Retain the printed trial balance
in your personal cumulative folder until the due date assigned by your instructor for
the project, or submit a saved version of the trial balance electronically if directed to
do so by your instructor.
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
ledger for governmental activities comprise a separate “set of books” from those for
the General Fund. Be sure to enter 2022 from the dropdown menu in the [Year]
column and enter 2d in the [Add description] field in the [Description] column.
Select each account individually and insert the appropriate debit or credit amount for
each account. When you have completed entering the initial data, verify the
accuracy of all entries and click [Post entries] to post the entries to the
governmental activities, government-wide general ledger.
CITY OF BINGHAM
Governmental Activities, Government-wide Level
Post-closing Trial Balance
As of December 31, 2022
Account Title Debits Credits
Cash $ 1,692,125
Taxes Receivable—Delinquent 513,875
Allowance for Uncollectible Delinquent Taxes $ 43,681
Land 2,310,000
Improvements Other than Buildings 8,900,000
Accumulated Depreciation—Improvements
Other Than Buildings 3,310,000
Infrastructure 33,109,000
Accumulated Depreciation—Infrastructure 22,408,000
Buildings 11,520,000
7
Current Portion of Long-term Debt 500,000
Serial Bonds Payable—3% 3,750,000
Premium on Bonds Payable 43,900
Deferred Inflows of Resources 25,000
Net Position—Net Investment in Capital Assets 27,025,600
Net Position—Restricted for Debt Service 950,000
Net Position—Unrestricted 909,507
Totals $65,453,819 $65,453,819
8
Chapter 3 Recording the Annual Budget
The following budget for the General Fund of the City of Bingham was legally adopted
for the fiscal year ending December 31, 2023.
Estimated Revenues:
Property Taxes $ 7,672,500
Sales Taxes 775,000
Interest and Penalties on Taxes 22,000
Licenses and Permits 485,000
Appropriations:
General Government $ 2,605,000
Public Safety 3,785,000
Public Works 1,795,000
Estimated Other Financing Uses:
Interfund Transfers Out $ 75,000
Required
a. After opening the data file you created for Chapter 2 of this project, record the
budget in the general journal, providing entries in the Detail Journal when directed.
Begin by 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 2023. Enter 3a 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
estimated revenue source. In the Detail Journal, select “Budget Authorization” from
the dropdown menu for [Description].
9
Estimated Other Financing Uses—Interfund Transfer Out and debit or credit
Budgetary Fund Balance as appropriate to balance the budgetary entry. 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.
b. Go to [Reports], print the pre-closing subsidiary ledgers and pre-closing trial
balance for year 2023 from the “Reports” window for retention in your cumulative
file until directed by your instructor to submit them, or save and submit these
documents electronically if directed to do so by your instructor. (As of this time,
only the budget has been recorded.) This is your last opportunity to print or
export these 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 Bingham 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.
10
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 Bingham that occurred
during the 2023 fiscal year; the year for which the budget given in Chapter 3 was
recorded. Read all instructions carefully.
For each entry affecting budgetary accounts or operating statement accounts, the
Detail Journal will automatically open to allow you to record the appropriate amounts
in the detail budgetary or actual accounts, as was the case in Chapter 3.
1. [Para. 4a-1] Property taxes were levied in the amount of $7,750,000. It is
estimated that 1 percent of the tax will be uncollectible.
Required: Record this transaction in both the General Fund and governmental
activities journal. Record the tax levy as a revenue in both journals; you will
2. [Para. 4a-2] Tax anticipation notes were issued in the amount of $500,000.
Required: Record the issuance of this note in both the General Fund and
governmental activities general journals.
11
3. [Para. 4a-3] Purchase orders, contracts, and other commitment documents were
issued in the following amounts for the following functions:
General Government $ 395,000
Public Safety 1,055,000
Public Works 980,750
Health and Welfare 665,725
Culture and Recreation 625,125
Miscellaneous 98,000
Total $3,819,600
Required: Record the encumbrances in the General Fund general journal and
4. [Para. 4a-4] Grant funds of $25,000 recorded as Deferred Inflows of Resources at
the end of FY 2022 were recognized as revenue when timing requirements were
met.
Required: Record the revenue in both the General Fund and governmental
activities general journals by debiting Deferred Inflows of Resources and
crediting Revenue. Select “Previous Deferral” in the drop down [Description]
5. [Para. 4a-5] The General Fund paid $245,654 on the vouchers payable that were
outstanding at the end of FY 2022.
Required: Record the payment of this amount in both the General Fund and
governmental activities general journals.
6. [Para. 4a-6] The General Fund collected the following receivable amounts in
cash:
Current year Property Taxes $7,302,000
Delinquent Taxes 378,000
Interest and Penalties Receivable on Taxes 22,860
Sales Taxes 768,000
Total $8,470,860
Required: Record the receipt of cash and the related credits to receivables and
12
7. [Para. 4a-7] The General Fund collected the following amounts in cash:
Licenses and Permits 479,000
Fines and Forfeits 519,000
Intergovernmental Revenues 520,500
Charges for Services 385,750
Miscellaneous Revenues 220,500
Total $2,124,750
Required: Record the receipt of cash and additions to 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
8. [Para. 4a-8] The General Fund paid the $19,400 reported as Due to Other Funds
at the end of FY 2022. This amount was reported as Internal Payables to
Business-type Activities at the government-wide level. Do not record this
transaction in the Water Utility Fund until instructed to do so in Chapter 7 of this
case.
Required: Record the payment of this amount in both the General Fund and
governmental activities general journals.
9. [Para. 4a-9] Delinquent taxes receivable in the amount of $18,000 were written
off as uncollectible. Interest and penalties accrued on these taxes in the amount of
$1,350 were also written off.
13
10. [Para. 4a-10] General Fund payrolls for the year totaled $6,673,038. Of that
amount, $1,020,975 was withheld for employees’ federal income taxes;
$1,134,416 for federal payroll taxes; $381,760 for employees’ state income taxes;
$420,296 for retirement funds administered by the state government; and the
remaining $3,715,591 was paid to employees in cash. The City of Bingham does
not record encumbrances for payrolls. The payrolls were chargeable against the
following functions’ appropriations:
General Government $ 2,200,376
Required: Make summary journal entries for payroll in both the General Fund
and governmental activities general journals for the year.
11. [Para. 4a-11] Invoices for some of the goods and services ordered in transaction
4a-3 were received and vouchered for later payment. Select “Elimination” in the
drop down [Description] menu in the Detail Journal:
Actual Estimated
General Government $ 394,940 $ 393,060
Public Safety 1,047,650 1,049,500
Public Works 964,300 965,620
Health and Welfare 661,200 663,600
Culture and Recreation 615,750 617,000
Miscellaneous 98,000 98,000
Totals $3,781,840 $3,786,780
Required: Record the receipt of these goods and the related vouchers payable in
both the General Fund and governmental activities journals. At the government-
12. [Para. 4a-12] The General Fund paid vouchers during the year in the amount of
$3,515,000 as well as its liabilities for employees’ federal and state income taxes
withheld and payroll taxes.
14
Required: Record the payment of these items in both the General Fund and
governmental activities general journals.
13. [Para. 4a-13] The General Fund transferred $75,000 to the debt service fund for a
bond interest payment.
Required: Record this transaction in the General Fund only. The transaction has
to do so in Chapter 6 of this case.
14. [Para. 4a-14] Tax anticipation notes issued by the General Fund were paid at
maturity at the face amount plus interest of $10,000.
Required: Record the payment of these items in both the General Fund and
15. [Para. 4a-15] The General Fund recorded liabilities of $35,000 to other funds for
services received from the Water Utility Fund during the year. Of this amount,
$23,500 should be charged to Public Safety and $11,500 to General Government.
Required: Record the receipt of these services and the associated liability in the
General Fund and governmental activities journals. At the government-wide level
16. [Para. 4a-16] The year-end balance of supplies inventory is $7,000.
Required: Adjust the inventory of supplies account in both the General Fund and
governmental activities journals. At the government-wide level expenses in
General Government can be reduced by $7,000. In the General Fund, fund
balance should be classified as nonspendable.
17. [Para. 4a-17] The balances in the current taxes receivable and related estimated
uncollectibles accounts were reclassified as delinquent.
Required: Record the reclassification in the General Fund and governmental
activities journals. Property tax revenues should be reduced and Deferred Inflows
15
18. [Para. 4a-18] Interest and penalties of $59,580 were recorded on delinquent
taxes, of which $10,750 was estimated to be uncollectible. Sales taxes receivable
of $21,722 were also recorded.
Required: Interest and penalties should be recorded as Deferred Inflows of
19. [Para. 4a-19] In view of unexpected revenue and expenditure developments the
city council revised the budgets for the current year as shown below:
Budget Adjustments
Estimated Revenues:
Property Tax $7,500 increase
Licenses and Permits 6,000 decrease
Fines and Forfeits 4,000 increase
Appropriations:
Culture and Recreation $3,000 decrease
Public Works 5,000 decrease
General Government 4,000 increase
Miscellaneous 3,000 increase
Required: Record the budget amendments in the General Fund general journal
20. [Closing Entry] Following the instructions in the next paragraph, prepare and
post the necessary entries to close the 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 Bingham honors all outstanding encumbrances
at year-end, it is not necessary to close Encumbrances to Encumbrances
reestablished at the beginning of the next year, although entries are not required in
this problem for the next year.
To close the temporary accounts, you must click on the box for [Closing Entry],
“Closing Entry” checkbox will appear next 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, with the exception of Estimated Other Financing
Account Amount
Fund Balance—Committed—Public Safety $20,300
Fund Balance—Committed—Public Works 13,790
Fund Balance—Assigned— Health and Welfare 19,500
Fund Balance—Nonspendable—Inventory of Supplies 7,000
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
(Chapter 6) transactions affecting governmental activities at the government-wide
level have been recorded.
b. Select [Export] from the drop down [File] menu to create an Excel or other
worksheet of the General Fund post-closing trial balance as of December 31,
2023. Use Excel to prepare in good form a balance sheet for the General Fund as
of December 31, 2023. Follow the format shown in Illustration 4-4 of the
textbook.
d. Refer to the General Fund pre-closing subsidiary ledger account balances found in
part c above to prepare in good form a statement of revenues, expenditures, and
17
changes in fund balances—budget and actual for the General Fund for the year
ended December 31, 2023. (See Illustration 4-6 in the textbook for an example
format.) Note that the change in inventory balance and accompanying change in
nonspendable fund balance (see 4a-16) must be included on this statement.
Before closing the City of Bingham 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.
18
Chapter 5 Recording Capital Asset and Capital Project Transactions
City Hall Annex Construction Fund and Governmental Activities at the
Government-wide Level
During fiscal year 2022, the voters of the City of Bingham approved the issuance of 2
percent tax-supported serial bonds in the face amount of $7,500,000 to construct and
equip an annex to the City Hall. The bonds are to mature in blocks of $375,000 every
April 1 and October 1 over a 10-year period commencing in 2024.
Required
a. Prepare general journal entries as necessary to record the following transactions in the
general journals of the City Hall Annex Construction Fund and, if applicable, in the
governmental activities general journal at the government-wide level. Do not record
1. [Para. 5a-1] On April 1, 2023, the bond issue was sold at premium for
$7,550,225. Cash in the face amount of the bonds, $7,500,000, was deposited in
the City Hall Annex Construction Fund; the premium was deposited in the debt
service fund, as required by state law.
Required: Record these transactions in the City Hall Annex Construction Fund
and governmental activities journals. In addition to recording the liability for 2%
2. [Para. 5a-2] The city invested $5,000,000 of the bond proceeds in 90-day notes.
Required: Record this transaction in both the City Hall Annex Construction
Fund and governmental activities general journals.
3. [Para. 5a-3] The City Hall Annex Construction Fund purchased land for the
annex for $475,000. This amount was vouchered.
Required: Record this transaction in both the City Hall Annex Construction
19
4. [Para. 5a-4] A contract for architectural services was signed at an estimated
amount of $225,000 for the design of the City Hall Annex.
Required: Record the encumbrance in the City Hall Annex Construction. This
transaction has no effect at the government-wide level.
5. [Para. 5a-5] Bond issue and other legal costs were vouchered in the amount of
$149,000.
Required: Record this transaction in both the City Hall Annex Construction
6. [Para. 5a-6] Preliminary plans were received (related to the contract signed in
paragraph 5a-4) for which architectural fees of $110,000 were vouchered.
Required: Eliminate a portion of the encumbrance and record a Vouchers
Payable liability in the City Hall Annex Construction Fund and governmental
activities journals, as appropriate.
7. [Para. 5a-7] Construction bids were opened and analyzed. A contract was signed
with the firm that submitted the winning bid of $6,200,000. A provision of the
contract permits the city to withhold 5 percent of payment pending final
acceptance of the completed project.
Required: Record the signing of the contract in the City Hall Annex
8. [Para. 5a-8] Vouchers payable were recorded in the amount of $115,000 for the
final architectural plans and specifications for the construction project (see para.
5a-4).
Required: Eliminate the remaining encumbrance for the architectural services
9. [Para. 5a-9] The 90-day notes matured, paying $32,500 in interest (see para. 5a-
2).