To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com CHAPTER 10 UNDERSTANDING THE ISSUES Separating activity into governmental, proprietary, and fiduciary funds allows for detailed reporting of resources and spending Separating of activities also allows for a different measurement focus and basis of accounting depending on whether activities are general government or business-type activities In addition, since the governmental activities are accounted for using a modified accrual basis of accounting in order to capture financial resource information, the account groups have served to record (i.e., list) the long-term capital assets and liabilities Proponents of this model argue that information generated best serves the budget-planning process and answers questions relating to how much resources are needed to pay for the current level of services for governmental funds Fixed assets acquired with proceeds from general obligation bonds are accounted for in the general fixed assets account group subsequent to acquisition Revenues would be credited if resources were received from a source outside of the governmental unit that need not be repaid An example is a property tax levy If repayment is required, as in the case of a bond issue, the credit is to Other Financing Sources The latter account is also used for amounts received from other funds of the same governmental unit if that unit had previously recorded the resources as revenue The procedure prevents recognizing the same resources twice as revenue Both funds account for public-purpose trusts If the resources and any earnings on investments can be used to finance government programs, then a special revenue fund is used If only the earnings can be spent, a permanent fund is used Budgets are the legal authorization to raise revenue, incur long-term debt, and appropriate resources Authorized expenditures are termed appropriations Budgetary totals are recorded in the general ledger as control accounts to allow for budgetary comparisons in the ledgers as well as to facilitate financial reporting of a budgetary comparison statement Both are proprietary funds An enterprise fund is used to account for activities of a government that provides goods or services to the public An internal service fund is used to account for activities providing goods or services to other departments within the same governmental unit The advantage of reporting designations of the fund balance is improved communications of decisions made by the common council or town/village board that will impact the availability of resources for other purposes While not restricted by external grantors or donors, these funds are internally designated for specific purposes, e.g., planned purchases, reduction of taxes, and improvements in services The accounting emphasis for governmental funds emphasizes the funds available, spendable resources, and their expenditures Modified accrual accounting is required The accounting for proprietary funds, however, emphasizes expenses rather than expenditures and is similar to that for a private enterprise Proprietary funds measure net income, focusing on the total cost of services and the amounts of cost recovered by revenue Proprietary funds are accounted for with a capital maintenance measurement focus, using the accrual basis of accounting They account for their own assets (including fixed assets and depreciation) and liabilities (including long-term debt) Proprietary funds also differentiate between contributed and earned equity, just as a corporation would The encumbrance system is designed as an early indicator or an ―expected expenditure‖ to prevent overspending and to plan for payment of an ―expected liability.‖ It is an estimate of an expenditure that may or may not be realized by year-end but will require the use of existing or future financial resources Capital projects funds are used to account for the inflows and outflows of financial resources raised and expended to acquire major capital assets used by the general government This accounting is in accordance with the flows of financial resources measurement focus adopted 461 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Understanding the Issues 10 Private-purpose trust funds are used to account for assets held by the government on behalf of an individual, group, or organization Perma- nent funds record assets held, income from which will benefit the government activities 462 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISES EXERCISE 10-1 (1) c Items (a) and (b) are Other Financing Sources, while (d) is a reduction of Expenditures (2) d (a), (b), and (c) represent outflows of financial resources to acquire goods and services The consumption, not the purchase of inventory, is an expenditure (3) a Donated fixed assets are recorded in the general fixed asset account group at their fair value when received (4) b Representing potential inflow of assets, Estimated Revenues is debited (5) d Taxes receivable is debited with offsetting credits to an allowance for uncollectible taxes and revenues (6) d Interfund transfers employ the other financing uses/sources accounts (7) c Long-term debt related to governmental funds may be operating debt or general long-term capital debt (8) b The purchase of equipment is an outflow of resources from the general fund An additional entry to record the fixed asset will be made in the account group (9) b Expenditures are closed along with the other nominal accounts to determine an increase or decrease in the fund balance from the current period operations (10) d When a purchase order is approved, an encumbrance is debited to reflect the expected expenditure A reserve is also established by a credit to Fund Balance—Reserved for Encumbrances EXERCISE 10-2 (1) a (2) e (3) b (4) c (5) e (6) c (7) b 463 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-3 Estimated Revenues Estimated Other Financing Sources Appropriations Estimated Other Financing Uses Budgetary Fund Balance 502,000 115,000 500,000 45,000 72,000 (Note to Instructor: Property taxes paid by a proprietary fund are considered revenue.) EXERCISE 10-4 Jan Feb Apr July Cash Tax Anticipation Notes Payable To record borrowing 275,000 Cash Tax Liens Receivable Revenues To record collection of tax liens 14,000 Cash Tax Liens Receivable To record collection of tax liens, sale of property 16,000 Allowance for Uncollectible Tax Liens Tax Liens Receivable Revenues To close allowance 23,000 Cash Delinquent Property Taxes Receivable Revenues To record collection of delinquent property taxes 104,500 Tax Liens Receivable Delinquent Property Taxes Receivable To transfer delinquent property taxes to tax liens 35,000 Allowance for Uncollectible Delinquent Taxes Allowance for Uncollectible Tax Liens Revenues To transfer allowance for uncollectible delinquent taxes to allowance for uncollectible tax liens 40,000 Property Taxes Receivable Allowance for Property Taxes Receivable Revenues To record current property tax levy 422,000 464 275,000 12,000 2,000 16,000 17,000 6,000 100,000 4,500 35,000 35,000 5,000 21,100 400,900 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises Exercise 10-4, Concluded Sept Cash Property Taxes Receivable To collect current property taxes 365,000 Tax Anticipation Notes Payable Expenditures Cash To pay off tax anticipation notes 275,000 18,000 365,000 293,000 EXERCISE 10-5 (1) Cash Other Financing Sources To transfer from municipal trust fund 45,000 45,000 (2) No entry in the general fund for land Record in the general fixed assets account group: Land Investment in General Fixed Assets—Donations To record donation of park 75,000 (3) Due from State Revenues To record state grant 30,000 (4) Cash Other Financing Sources To record sale of fire truck 9,000 75,000 30,000 9,000 Additional entry in General Fixed Assets Group: Investment in General Fixed Assets—General Fund Revenues Equipment 36,000 (5) Cash Revenues Deferred Revenue To record sale of park stickers 5,000 465 36,000 2,500 2,500 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-6 (1) Expenditures ($120,000 + $60,000 + $125,000 + $13,000) Tax Anticipation Notes Payable Inventory of Supplies Vouchers Payable To record payment of vouchers 318,000 200,000 45,000 (2) Other Financing Uses Cash To transfer to debt service fund 57,000 (3) Expenditures Inventory of Supplies To record consumption of inventory 42,500 Fund Balance—Unreserved, Undesignated Fund Balance—Reserved for Inventory To adjust reserve to match inventory balance 2,500 563,000 57,000 42,500 2,500 EXERCISE 10-7 (1) Encumbrances Fund Balance—Unreserved, Undesignated To restore previous year’s encumbrances 18,000 (2) Encumbrances Fund Balance—Reserved for Encumbrances To record current encumbrances 70,000 (3) Fund Balance—Reserved for Encumbrances Encumbrances To reverse encumbrances for orders received 88,000 Inventory of Supplies Vouchers Payable To record purchase of inventory 87,000 (4) Expenditures ($31,000 + $87,000 – $35,000) Inventory of Supplies To record use of inventory 83,000 Fund Balance—Unreserved, Undesignated Fund Balance—Reserved for Inventory To adjust reserved fund balance to match inventory 4,000 466 18,000 70,000 88,000 87,000 83,000 4,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-8 (a) Estimated Revenues Appropriations Budgetary Fund Balance—Unreserved To record budget for the year 520,000 (b) Taxes Receivable—Current Allowance for Uncollectible Current Taxes Revenues To record tax levy 378,788 (c) Encumbrances Fund Balance—Reserved for Encumbrances To record purchase orders authorized 240,000 (d) Cash Taxes Receivable—Current To record receipt of tax payments 280,000 (e) Fund Balance—Reserved for Encumbrances Encumbrances To reverse encumbrance entry for items invoiced 223,000 Expenditures Vouchers Payable To record invoices vouchered 225,000 Expenditures Vouchers Payable To record salaries approved for payment 135,000 (g) Cash Revenues To record receipt of a grant-in-aid (h) Cash Revenues To record receipt of miscellaneous revenues 100,000 (i) 120,000 (f) (j) Expenditures Cash To record purchase of property (The property would also be entered in the general fixed assets accounts group.) 515,000 5,000 3,788 375,000 240,000 280,000 223,000 225,000 135,000 100,000 10,000 10,000 120,000 No entry Recorded only in general fixed assets account group (k) Other Financing Uses Due to Other Funds To record amount due other funds and approved for payment 467 12,000 12,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises Exercise 10-8, Concluded (l) Due from State Revenues To record share of state sales taxes receivable 30,000 (m) Vouchers Payable Cash To record vouchers paid 175,000 (n) Budgetary Fund Balance—Unreserved Appropriations Estimated Revenues To reverse budgetary entry 5,000 515,000 Revenues Expenditures Other Financing Uses Fund Balance—Unreserved, Undesignated 515,000 Fund Balance—Unreserved, Undesignated Encumbrances To close nominal accounts 17,000 30,000 175,000 520,000 480,000 12,000 23,000 17,000 EXERCISE 10-9 (a) Land Buildings Investment in General Fixed Assets—General Funds To record property purchase 325,000 975,000 (b) Land Buildings Investment in General Fixed Assets—Donations To record donated property at its fair value 330,000 220,000 (c) Construction in Progress Investment in General Fixed Assets—Capital Projects Funds (General Obligation Bonds) To record cost of work to date 800,000 (d) Machinery and Equipment Investment in General Fixed Assets—General Fund Revenues To record fire engine purchase at full value 190,000 Investment in General Fixed Assets—General Fund Revenues Machinery and Equipment To record trade-in 100,000 (e) Infrastructure Investment in General Fixed Assets—Capital Projects Funds To record cost of new street 250,000 468 1,300,000 550,000 800,000 190,000 100,000 250,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-10 (1) Amount to Be Provided for Compensated Absences Unfunded Compensated Absences To record the noncurrent portion of the obligation for vacations (2) Unfunded Compensated Absences Amount to Be Provided for Compensated Absences To reduce the long-term obligation for vacations 2,200,000 2,200,000 400,000 400,000 (3) Amount to Be Provided for Claims and Judgments Claims and Judgments Payable To record the noncurrent portion of the judgment against the city 11,000,000 11,000,000 (4) Amount to Be Provided for Payment of Bonds General Obligation Bonds Payable To record the issuance of general obligation bonds at maturity value 100,000,000 100,000,000 (5) Amount Available in the Debt Service Fund Amount to Be Provided for Payment of Bonds To record accumulation of resources in the Debt Service Fund for bond principal 1,000,000 1,000,000 (6) Amount Available in the Debt Service Fund Amount to Be Provided for Payment of Bonds To record interest earned and appreciation in fair value of investments in the Debt Service Fund 4,800,000 4,800,000 EXERCISE 10-11 (1) c Item A is debt service, B is in the trust fund, and D is within the proprietary fund (2) c As an interest adjustment factor, the premium should be transferred to the debt service fund that pays the interest (3) a The general fund uses modified accrual Enterprise funds recognize revenue when earned under full accrual accounts (4) a The entry for reinstatement is: Encumbrances Fund Balance—Unreserved, Undesignated (5) a XXX XXX The cash flow statement for governmental proprietary funds and nonexpendable trust funds has four parts Cash from operations, cash from capital financing activities, cash from noncapital financing activities, and cash from investing activities 469 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises Exercise 10-11, Concluded (6) d Payments for services provided by an internal service fund within the same governmental entity are considered quasi-external transactions (7) b This is one of two reclassification entries: Deferred Revenues Revenues XXX XXX (8) c The revenue is recorded by the general fund, but the debt service fund makes the payment of principal and interest (9) a Governmental funds not report cash flows since the amounts reported using modified accrual are near cost (10) b Accounting procedures of internal service funds resemble commercial accounting EXERCISE 10-12 (1) a Permanent funds are classified as governmental and follow accounting rules similar to general funds (2) d The debt service fund follows general fund procedures except for the usual practice of not using budgetary entries (3) c The amount to be provided is reduced with the receipt of available funds in the debt service fund (4) a Debt service funds are used to account for the payment of interest and principal on general government long-term debt, not short-term debt or the debt of proprietary funds (5) b With no commitment by the governmental unit, the liability is solely that of the assessed property owners However, the amount of the bond liability may be shown in the notes to the financial statements (6) b The agency fund internally distributes monies to recipient funds (7) d This is the typical entry to record a year’s capitalizable costs of an unfinished capital project (8) d Capital projects funds are used to account for major construction activity financed by general tax revenues or special assessments (9) a An investment trust fund is used to account for assets, liabilities, net assets, and changes in net assets of external participants in an investment pool managed by the government (10) a Permanent funds are used to account for public-purpose trusts, for which earnings are expendable for a specific purpose Permanent funds are classified as governmental funds 470 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-14 (a) No entry is made in the Debt Service Fund (b) Expenditures Matured Bonds Payable Matured Interest Payable (6% × $5,000,000) To record matured items 800,000 (c) Cash Other Financing Sources To record receipt of cash from the general fund 800,000 (d) Cash with Fiscal Agent Cash To record transfer to First Bank 800,000 (e) Matured Bonds Payable Matured Interest Payable Cash with Fiscal Agent To record payments by bank 500,000 291,000 472 500,000 300,000 800,000 800,000 791,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-15 (a) Restricted Assets—Cash for Construction Interfund Transfer from General Fund To record restricted amount received from the general fund 300,000 (b) Accounts Receivable Due from Other Funds Operating Revenues (or Billings for Services) To record billings 220,000 67,000 (c) Cash Due from Other Funds Accounts Receivable To record collections 232,000 (d) Restricted Assets—Revenue Bond Development Cash Revenue Bonds Payable To record bond issuance with restriction on proceeds 700,000 300,000 287,000 42,000 190,000 700,000 (e) No entry Enterprise Funds not use budgetary accounts for encumbrances (f) Construction in Progress Contracts Payable from Restricted Assets To record liability for work to date 360,000 (g) Contracts Payable from Restricted Assets Restricted Assets—Revenue Bond Development Cash To record issuance of check from restricted cash 300,000 EXERCISE 10-16 (a) GF, GFAAG (b) DSF, CPF, GLTDAG (c) GF, DSF, GLTDAG (d) DSF, GLTDAG (e) CPF, GFAAG (f) PF, SRF (g) ENT, INT, GFAAG, PPT (h) ENT (i) CPF, DSF, GLTDAG, GFAAG 473 360,000 300,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Exercises EXERCISE 10-17 (1) g (6) j (2) k (7) d (3) l (8) a (4) l (9) f (5) e (10) b EXERCISE 10-18 (1) b (6) g (2) f (7) a (3) d (8) d (4) d (9) i (5) b (10) h 474 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEMS PROBLEM 10-1 (1) b The GASB stipulated that the measurement focus for governmental funds is the flow of financial resources (2) c Interperiod equity seeks to determine whether current-year revenues are sufficient to pay for current-year services or whether future taxpayers will be required to assume burdens for services previously provided The flow of financial resources measurement focus measures the extent to which financial resources obtained during a period are sufficient to cover claims incurred during that period against financial resources of a governmental fund The GASB recognized that because budgetary and fund accounting practices cause costs of government activities to be spread among a number of funds, general purpose financial reporting must also include the measurement of the cost of services provided during a period (3) a Long-term debt used to purchase fixed assets is recorded in the general fund as an other financial resource, but the debt itself is recorded in the general long-term debt account group (4) b Funds are used to separate reporting of the diverse variety of governmental activities and to meet legal provisions stipulating use of resources imposed on the governmental unit (5) a The Governmental Accounting Standards Board is the authoritative body for financial reporting standards used by state and local governments (6) b Reporting outstanding encumbrances as a fund balance reserve indicates that not all of the resources in the fund are available for new expenditures (7) d Current standards specify that neither interest nor principal on long-term debt should be accrued in advance of the year in which it is due Governments may, however, opt to accrue principal if resources are available in the debt service fund by year-end PROBLEM 10-2 (1) c These notes are short-term operating debt that will be repaid out of current revenues (2) b A hypothetical entry to record the tax levy is: Taxes Receivable—Current Allowance for Uncollectible Current Taxes Revenues 100,000 4,000 96,000 Because revenues are estimated and recorded net of the uncollectible, a decrease in the allowance is a revision (in this case an increase) of revenues This is true even if the revenues were recorded in a prior period (3) a Encumbrance control is increased when an order is placed and decreased when the voucher is recorded (4) a Grants from outside units are revenues unless they require the prior recording of an expenditure that is then reimbursed 475 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems Problem 10-2, Concluded (5) c The appropriation still available for use is the original appropriation less expenditures and encumbrances (6) d When supplies are received, the original entry to encumber the estimated cost is reversed (7) a The general fixed asset account group records the fixed assets of governmental funds but not proprietary funds or trust funds (8) b Revenues are recognized when measurable and available to meet current-period expenditures This is interpreted to include collections of the current period or shortly after year-end (usually within 60 days of year-end) (9) d The fixed asset is recorded in the account group at its fair value with a credit to Investment in General Fixed Assets identifying the original funding source (10) c Expenditures are recorded when the liability is incurred Under modified accrual basis of accounting, the noncurrent liability is recorded in the general long-term debt account group PROBLEM 10-3 (a) Estimated Revenues Estimated Other Financing Sources Appropriations Budgetary Fund Balance—Unreserved xxx xxx (b) Taxes Receivable—Current Allowance for Uncollectible Current Taxes Revenues xxx (c) Cash Allowance for Uncollectible Delinquent Taxes Taxes Receivable—Delinquent xxx xxx (d) Encumbrances Fund Balance—Reserved for Encumbrances xxx (e) Expenditures Vouchers Payable xxx (f) Fund Balance—Reserved for Encumbrances Encumbrances xxx Expenditures Vouchers Payable xxx (g) Cash Other Financing Sources xxx 476 xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems Problem 10-3, Concluded (h) Expenditures Cash xxx (i) Cash Tax Anticipation Notes Payable xxx xxx xxx PROBLEM 10-4 (1) At inception of the lease: General Fund Expenditures Other Financing Sources To record the acquisition of the equipment under capital lease 800,000 General Fixed Assets Account Group Leased Equipment Investment in General Fixed Assets—Capital Leases To record the equipment 800,000 General Long-Term Debt Account Group Amount to Be Provided Capital Lease Obligation To record the capital lease obligation 800,000 Expenditures (interest) Expenditures (principal) Cash To record the first lease payment of principal and interest 48,000 60,694 800,000 800,000 800,000 (2) First payment: General Fund General Fixed Assets Account Group Investment in General Fixed Assets—Capital Leases Leased Equipment To record the depreciation on the leased equipment (optional entry under current standards) General Long-Term Debt Account Group Capital Lease Obligation Amount to Be Provided To record the reduction of the lease principal Note: Each lease payment reduces the principal balance of the obligation Therefore, each subsequent payment will allocate a smaller portion to interest and a larger portion to principal 477 108,694 80,000 80,000 60,694 60,694 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-5 (1) Year 1: General Fund Expenditures Cash To record the pension benefits financed by current-year resources 4,000,000 4,000,000 Amount to Be Provided Unfunded Pension Obligation To record the portion of the actuarial required contribution not financed in the current period 2,000,000 2,000,000 General Fund Expenditures Cash To record the pension benefits paid in Year 6,000,000 6,000,000 General Long-Term Debt Account Group Unfunded Pension Obligation Amount to Be Provided To record the payment of $1,000,000 over the actuarial required contribution in Year 1,000,000 1,000,000 General Long-Term Debt Account Group (2) Year 2: PROBLEM 10-6 (1) Expenditures (2) Investment in General Fixed Assets—Capital Leases (3) Amount to Be Provided for Lease Payments Capital Lease Payable 478 150,000 150,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-7 Entry in General Fixed Assets Account Group Entry in General Fund (a) Expenditures Voucher Payable To record voucher Fund Balances Reserved for Encumbrances Encumbrances To reverse encumbrance (b) Cash Other Financing Sources To record proceeds from equipment sale 75,000 75,000 75,000 70,000 70,000 5,000 (c) No entry (d) Expenditures Cash To record payment for snow plow Machinery and Equipment 75,000 Investment in General Fixed Assets —General Fund Revenues To record purchase 68,000 Investment in General Fixed Assets— 5,000 General Fund Revenues Machinery and Equipment To remove equipment sold 15,000 15,000 Land Investment in General Fixed Assets—Donations To record donated land 100,000 Construction in Progress Investment in General Fixed Assets—Donations To record partially finished donated building 300,000 Investment in General Fixed Assets— 68,000 Special Revenue Funds Machinery and Equipment To remove traded snow plow Machinery and Equipment Investment in General Fixed Assets—General Fund Revenues To record new snow plow acquired 479 100,000 300,000 35,000 35,000 80,000 80,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-8 Transaction Fund or Group (a) GLTDAG (b) (c) (d) Entry Amount to Be Provided for Payment of Term Bonds Term Bonds Payable General Fund Other Financing Uses Cash GLTDAG Amount Available in Debt Service Funds— Term Bonds Amount to Be Provided for Payment of Term Bonds General Fund Other Financing Uses Cash GLTDAG Amount Available in Debt Service Funds— Serial Bonds Amount to Be Provided for Payment of Serial Bonds (f) 200,000 200,000 200,000 200,000 135,000 135,000 135,000 135,000 General Fund Expenditures Cash 22,000 GFAAG Equipment Investment in General Fixed Assets— General Fund Revenues 25,000 Investment in General Fixed Assets— General Fund Revenues Equipment (e) 2,700,000 2,700,000 GLTDAG GFAAG 22,000 25,000 15,000 15,000 Serial Bonds Payable Amount Available in Debt Service Funds— Serial Bonds 135,000 Construction in Progress Investment in General Fixed Assets— Capital Projects Fund 450,000 480 135,000 450,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-9 (1) a Enterprise funds record their own debt (2) d The general fund records only its transfer; the debt proceeds are recorded as other financing sources in the capital projects fund (3) d All self-sustaining activities are recorded in proprietary funds; in this case, both are enterprise funds (4) a Services to other governmental units by an internal service fund are recorded as either revenues or billings (5) b The change in the fund balance is equal to (revenues plus other sources) minus (expenditures and other uses) (6) c The grant is for the construction of a fixed asset (7) b The capital projects fund records other financing sources and uses The debt service fund records other financing sources The general long-term debt account group records the amount available in the debt service fund for principal only Because the premium is an adjustment to the interest, no entry is made in the GLTDAG (8) b The agency fund distributes the collections to the recipient funds 481 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-10 (1) Entries in the Internal Service Fund: Expenses—Claims and Judgments Cash Claims and Judgments Liability To record losses incurred and claims paid 1,500,000 Cash Revenues—Insurance Premiums To record premium revenue from other departments 2,000,000 1,300,000 200,000 2,000,000 (2) Entries in General Fund: Expenditures Cash To record premium transferred to insurance internal service fund 1,200,000 1,200,000 Entries in Utility Enterprise Fund: Expenses Cash To record premium transferred to insurance internal service fund 800,000 800,000 (3) If the county elects to use a general fund for its self-insurance activity, revenue can be recognized from other funds up to the amount of actual losses incurred ($1,500,000) or 75% of the amount actually billed and transferred from other funds The $500,000 excess of transfers over actual losses must be reported as an interfund transfer Similarly, the funds transferring the premium would be limited to their share of actual losses in the recognition of expenditures/expenses PROBLEM 10-11 (1) b, f (2) b, e (3) d, b (4) a, c PROBLEM 10-12 (1) General Fixed Assets Account Group (6) Private-Purpose Trust (2) General Fixed Assets Account Group (7) Agency Fund (3) General Long-Term Debt Account Group (8) Agency Fund (4) Internal Service Fund (9) Permanent Fund (5) General Long-Term Debt Account Group (10) Special Revenue Fund 482 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-13 (1) (a) Inventory of Materials and Supplies Vouchers Payable To record purchases on account 72,000 (b) Operating Expenses Inventory of Materials and Supplies To record inventory adjustment ($80,000 + $72,000 – $65,000) 87,000 (c) Operating Expenses Cash To record salaries and wages paid 235,000 (d) Operating Expenses Cash To record payment of utility charge 40,000 (e) Operating Expenses Allowance for Depreciation—Building Allowance for Depreciation—Computer Equipment To record depreciation 139,500 (f) Due from General Fund Due from Water and Sewer Fund Due from Special Revenue Fund Operating Revenues To record billings 392,000 84,000 42,000 (g) Cash Due from General Fund Due from Water and Sewer Fund Due from Special Revenue Fund To record collections 506,000 (h) Vouchers Payable Cash To record voucher payment ($41,000 + $72,000 – $19,000) 94,000 (2) Closing Entries: Operating Revenues Operating Expenses Income Summary To close nominal accounts Income Summary Retained Earnings—Unreserved To close Income Summary 483 72,000 87,000 235,000 40,000 6,500 133,000 518,000 396,000 84,000 26,000 94,000 518,000 501,500 16,500 16,500 16,500 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems PROBLEM 10-14 (1) Landfill Expense Landfill Closure and Post-Closure Care Liability To record 300,000 ÷ 6,000,000 × $10,000,000 500,000 (2) Landfill Expense Landfill Closure and Post-Closure Care Liability To record (300,000 + 300,000) ÷ 5,800,000 × $10,200,000 less $500,000 already recognized 555,172 500,000 555,172 (3) If the landfill is accounted for in the general fund, then the liability would be recognized in the general long-term debt account group No entries would be made in the general fund until actual payments are made PROBLEM 10-15 Fund or Account Group Journal Entry (1) General Fund Estimated Revenues Appropriations Budgetary Fund Balance—Unreserved To record the budget (2) Special Revenue Fund Estimated Revenues Appropriations Budgetary Fund Balance—Unreserved To record budget for gas tax General Fund Taxes Receivable—Current Allowance for Uncollectible Current Taxes Revenues To record tax levy Capital Cash Expenditures Other Financing Uses Other Financing Sources To record bond sale (3) (4) Projects Fund (5) General Debt Account Group Amount to Be Provided for Payment of Term Bonds Term Bonds Payable To record long-term debt Capital Projects Fund Encumbrances Fund Balance—Reserved for Encumbrances To record signed contract 484 2,500,000 2,450,000 50,000 264,500 250,000 14,500 1,400,000 28,000 1,372,000 985,000 5,000 10,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10—Problems Problem 10-15, Concluded Fund or Account Group (6) (7) (8) (9) (10) Journal Entry Capital Projects Fund Fund Balance—Reserved for Encumbrances Encumbrances To liquidate encumbrances Capital Projects Fund Expenditures Cash To record school cost 990,000 General Fixed Assets Account Group Buildings Investment in General Fixed Assets— Capital Projects Funds To record fixed asset 990,000 General Fund Other Financing Uses Cash To record transfer to debt service fund 100,000 Debt Service Fund Cash Other Financing Sources To record transfer from general fund 100,000 General Fixed Assets Account Group Land Investment in General Fixed Assets— Donations To record land donation 100,000 Special Revenue Fund Cash Due from State Government Revenues Deferred Revenues To record state gas taxes 205,000 60,000 Special Revenue Fund Expenditures Vouchers Payable To record vouchers approved for payment 210,000 485 1,000,000 1,000,000 990,000 990,000 100,000 100,000 100,000 205,000 60,000 210,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ... Vouchers Payable To record vouchers approved for payment 210, 000 485 1,000,000 1,000,000 990,000 990,000 100 ,000 100 ,000 100 ,000 205,000 60,000 210, 000 To download more slides, ebook, solutions... Inventory of Supplies Vouchers Payable To record purchase of inventory 87,000 (4) Expenditures ($31,000 + $87,000 – $35,000) Inventory of Supplies To record use of inventory... 1,300,000 550,000 800,000 190,000 100 ,000 250,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Ch 10 Exercises EXERCISE 10- 10 (1) Amount to Be Provided