Chap004 - Chapter 04 - Accounting for Governmental Operating

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Unformatted text preview: Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements CHAPTER 4: ACCOUNTING FOR GOVERNMENTAL OPERATING ACTIVITIES ILLUSTRATIVE TRANSACTIONS AND FINANCIAL STATEMENTS OUTLINE Number Questions: 4-1 4-2 4-3 4-4 4-5 4-6 4-7 4-8 4-9 4-10 Cases: 4-1 4-2 4-3 4-4 Topic Type/Task Status (re: 14/e) Dual effects of transactions Statement of net assets vs. governmental fund balance sheet Benefits of encumbrance procedure Property tax revenue Cash basis budgets and GAAP Expenditures vs. expenses for supplies Contrast and compare ad valorem and derived tax revenues Utilization of interim financial reports Permanent funds Classes of nonexchange transactions Explain, examples Explain Revised 4-3 revised Explain Compute Explain Explain Explain 4-6 4-4 revised 4-5 revised 4-7 revised 4-8 Explain Describe Describe 4-9 4-10 New Analyzing results of operations Policy issues relating to property taxes Reporting internal service fund information Recognition and reporting of a multipurpose reimbursement grant Analyze, write Analyze, write Explain, write Analyze, explain Same Same Same New Examine Multiple Choice Calculate, JEs Same Revised New Calculate, JE Analyze and JEs Analyze and JEs 4-3 New New Journal Entries JE JE and Statement 4-5 Revised 4-6 Revised 4-7 Revised JEs and Statement 4-8, Parts A and B Revised 4-9 Exercises/Problems: 4-1 Examine the CAFR 4-2 Various 4-3 Calculation of required tax anticipation financing and recording issuance of TANs 4-4 Property tax calculations and journal entries 4-5 Adjusting entries for inventories of supplies 4-6 Special revenue fund and voluntary nonexchange transactions 4-7 Dade City - Closing journal entries 4-8 Interfund and interactivity transactions 4-9 Transactions and budgetary comparison schedule 4-10 Operating transactions and General Fund balance sheet 4-11 Permanent fund accounting 4-1 JEs and Statements Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements CHAPTER 4: ACCOUNTING FOR GOVERNMENTAL OPERATING ACTIVITIES—ILLUSTRATIVE TRANSACTIONS AND FINANCIAL STATEMENTS Answers to Questions 4-1. Under the GASB financial reporting model, governmental activities are reported on a long-term perspective at the government-wide level using the economic resources measurement focus and the accrual basis of accounting, similar to business accounting. This means that both current and noncurrent assets and liabilities are reported on the statement of net assets. Revenues and expenses, recognized on the accrual basis, are reported on the statement of activities. Conversely, the General Fund reports on a budget year perspective using the current financial resources measurement focus and the modified accrual basis of accounting. Therefore, the General Fund reports only current assets and liabilities. Revenues and expenditures and other financing sources and uses, recognized on the modified accrual basis, are reported on the statement of revenues, expenditures, and changes in fund balances. Examples of transactions or events that are recorded only in the General Fund general journal include budgetary entries and encumbrance transactions. Examples of transactions that are recorded only in the governmental activities general journal include depreciation expense on general capital assets and accrual of interest on long-term debt (as discussed in Chapter 6). Purchases of goods and services, salaries and wages, and most revenue items are examples of transactions that are recorded in both the General Fund general journal and the governmental activities journal. 4-2. The primary difference is that the government-wide statement of net assets focuses on total economic resources and consequently, uses the accrual basis of accounting; whereas, the General Fund focuses on current financial resources and employs the modified accrual basis of accounting. For that reason, capital assets and long-term liabilities are reported on the government-wide statement of net assets, but are reported as expenditures and other financing sources on the General Fund financial statement. Another difference is that the statement of net assets aggregates all governmental activities (including General Fund, special revenue, capital projects, debt service, permanent funds, and some internal service funds) and reports those in one column, whereas the balance sheet for governmental funds presents a column for the General Fund, each major fund, and one column for all other non-major funds. A further difference is that the statement of net assets can be presented either in the net assets format (assets minus liabilities equals net assets) or the traditional format required of the General Fund (assets equals liabilities plus fund equity). 4-3. The use of encumbrance procedures earmarks a portion of the remaining budgetary appropriation when a purchase order is issued or a contract for services is signed, thus alerting departmental officials and finance department personnel that a portion of the authorization is no longer available. Without the encumbrance, it is always possible that 4-2 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Answers, 4-3 (Cont’d) another purchase order or contract will be issued that would exceed the remaining available appropriation for that line item in a particular department. 4-4. $6,720,000 $6,720,000 $6,720,000 gross levy = gross levy - (.04 * gross levy) = (1 - .04) * gross levy = .96 * gross levy = $6,720,000/.96 = $7,000,000. 4-5. Agree. The statement is correct for two reasons. First, although the actual amounts may differ from those determined using GAAP, to facilitate a true comparison they should be presented on the same basis the law requires for budget preparation. Second, not only would comparisons using two different methods be less useful, they could make it more difficult to determine whether expenditures exceeded legally budgeted amounts. 4-6. Financial reporting for the operations of governmental funds focuses on the flow of current financial resources on the modified accrual basis. Accordingly, the governmental fund operating statement reports only outflows (expenditures and other financing uses) that reduce the balance of current financial resources. Financial reporting at the government-wide level, including for governmental activities, is intended to report on the cost of services on an accrual basis. Thus, the operating focus is on resources consumed (i.e., expenses) in providing services. Given these differences, if a governmental fund uses the purchases method its expenditures amount (supplies purchased) generally will be different than the expenses amount (supplies used) at the government-wide level. The one time when expenditures would equal expenses is when the amount of supplies purchased is the same as the amount of supplies used, i.e., no change in inventory. 4-7 Ad valorem taxes are levied on the officially assessed valuation of taxable real or personal property. The appropriate rate to be applied for particular parcels or items of property is determined by the legislative body of each jurisdiction having taxing authority over the property. Derived tax revenues, such as sales and income taxes, are selfassessing in that rates are predetermined for each kind or level of underlying sale or income. Thus, merchants apply the predetermined rate to dollars of sales to calculate the amount of sales tax to charge for each purchase. Similarly, taxpayers apply predetermined rules and rates to calculate the taxes they owe for a particular level and kind of income. From an accounting viewpoint, ad valorem taxes are generally measurable when assessed. Therefore, revenue is usually recognized at the time of the levy. Sales and income taxes, on the other hand, are often not measurable until merchants or taxpayers file a return with the state and, in some cases, with local governments. Thus, during the year, most sales and income revenues are recognized as received in cash; however, at year-end earned but unreported sales and income taxes must be estimated and accrued. 4-8. In any organization, governments included, sound financial management dictates that actual revenues and expenditures for the current period (e.g., month or quarter) and for the year to date be compared with budgeted amounts. In addition, resources on hand 4-3 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Answers, 4-8 (Cont’d) need to be periodically compared with obligations coming due. Adequacy of available cash and cash flow projections are important in assessing the organization’s ability to pay obligations and determining whether short-term financing might be necessary for some portions of the year. The interim schedules of budgeted and actual revenues and budgeted and actual expenditures and encumbrances, such as those shown in Illustrations 4-3 and 4-4, are examples of interim financial schedules that governments should consider preparing periodically. 4-9. Permanent funds and special revenue funds are both governmental fund types. If a public-purpose trust requires that the principal amount of the contribution not be expended, but that earnings on the principal (as defined in the trust agreement or by law) can be expended for a specified purpose, the trust must be accounted for in a permanent fund. On the other hand, if the public-purpose trust permits both the principal of the contribution and all earnings to be expended for the specified purpose, then a special revenue fund is used. If a trust provides benefit to an external party, organization, or other government, it is a private-purpose trust and must be recorded in a private-purpose trust fund—a fiduciary fund type. 4-10. As shown in the Appendix to Chapter 4, the four classes of nonexchange transactions are (1) derived tax revenues, (2) imposed nonexchange revenues, (3) government-mandated nonexchange transactions, and (4) voluntary nonexchange transactions. For derived tax revenues, such as sales and similar taxes, revenues should be recognized when the underlying exchange (e.g., sale of goods or services) has occurred. Revenues for imposed nonexchange revenues should be recognized when resources are required to be used or the first period that use is permitted. For both government-mandated and voluntary transactions, revenues (and expenses or expenditures for the other party) should be recognized in the period when all eligibility requirements, such as meeting matching requirements, have been met, unless received (or paid) in advance of use in a following period. If received in advance, the receipt should be reported as deferred revenue, which will then be reclassified as revenue in the period of use. Solutions to Cases: 4-1. a. Students will examine different governments, but in all cases there should be a significant difference between the change in the total fund balances of governmental funds and the change in net assets of governmental activities. A simple evaluation of a positive change or increase is that it represents “good news” while a decrease in fund balances or net assets represents “bad news.” This initial assessment should always be qualified until further analysis is done to determine whether the government had planned for that outcome. Changes in net assets at the government-wide level will include depreciation of general capital assets and amortization of bond discounts and premiums. Changes in the fund balances of governmental funds will include new acquisitions of capital assets that have 4-4 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, Case 4-1, a. (Cont’d) been recorded as expenditures for the current year (as well as sales of capital assets), and proceeds of bond issuances. In addition, the net revenue of certain internal service fund (ISF) activity will be reflected in governmental activities net assets, but not governmental funds fund balances, as the ISF is a proprietary fund. b. 4-2. Encourage students to examine the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances—Governmental Funds to the Statement of Activities (see Illustration A1-6). They should recast the information in this statement in “plain English” to be included in their memo. The nature of the story to be told is that the government is accountable for spending within its legal authorization as presented in the budget, and governmental fund financial statements are designed to show this fiscal accountability. On the other hand, government managers are also accountable for the operations of the government with a view toward the government as a whole and its long-term financial condition, and the government-wide statements are designed to meet this need. This is a case for which there is no “right” answer. Rather students should be given credit for how well they identify, develop, and communicate pertinent issues, and on the quality of their analysis. a. The recent plunge in real estate values in some parts of the U.S. was preceded by a rapid increase in values in many of the same parts, which gave rise to this case. Seldom will political realities permit a government to raise taxes as rapidly as valuations rise, nor will they be quick to lower taxes when real estate values fall. In some states such as California, Massachusetts, and Missouri, there are constitutional limits on the amount of year-to-year growth that is allowed for tax revenues. In some states, property taxes predominantly support independent school districts, whose tax rates may be limited by state funding formulas for K-12 education. But even where constitutional and legislative limitations do not exist, not many legislative bodies would be willing to increase property taxes at the same rate property values are growing because of potential political backlash. Keep in mind that even if the tax rate is left unchanged, the tax levy would increase in proportion to growth in market values. Consequently, political considerations generally will require a rate rollback in situations like those in Trevor City. The bottom line is that a 35 percent increase in your property taxes, at least in the short run, is unlikely. b. The city manager of Trevor City is most likely delighted to see her tax base grow so rapidly. However, as recent developments in the housing market suggest, rapid increases in property values, such as Trevor City has experienced, were built more on hype and euphoria than on fundamental value. Therefore, the city manager should be sensitive to the economic and political risk, as shown by recent developments, that property values could precipitously tumble and tax revenues could fall. Politically, it might be difficult to raise property tax rates to compensate for the drop in the tax base, particularly if the local economy has experienced a strong economic downturn. 4-5 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, Case 4-2b (Cont’d) Such situations almost always pose significant challenges for local government officials. 4-3. a. Question 1. This issue is resolved in the discussion related to Journal Entries 4a and 4b in this chapter. Keep in mind that generally the financial information for the internal service fund and all governmental funds is reported in the single Governmental Activities column of the government-wide financial statements. As a result, from the perspective of the government as a whole, the cost to the internal service fund to complete printing and signage jobs is the actual cost to the government. Any markup, above the cost of printing and signage, paid by governmental funds to the internal service fund simply resides in the internal service fund, and has not left governmental activities. Question 2. It seems almost natural that the billings to departments should be considered program revenues, Charges for Services, at the government-wide level, particularly since they are exchange transactions. However, this is not the case. Any transactions between funds for which financial information is reported in the Governmental Activities column of the government-wide statements have no net effect on governmental activities. Only a transaction between one of these funds and either an enterprise fund or an external entity (including fiduciary funds and discretely presented component units) will have any net effect on governmental activities. Question 3. It may seem intuitive that, in this case, 10 percent of the financial information of the Printing and Sign Fund should be reported in the Business-type Activities column of the government-wide financial statements and 90 percent should be reported in the Governmental Activities column. However, GASB standards and subsequent implementation guidance make it clear that if the internal service fund predominantly serves governmental activities, then all of its financial information should be reported in the Governmental Activities column. b. Under the revised assumptions, the Printing and Sign Fund now predominantly serves an enterprise fund. Under these circumstances, all of Printing and Sign Fund’s financial information should be reported in the Business-type Activities column. 4-4. a. Although it would be tempting to record a receivable and revenue (or, perhaps, deferred revenue) upon notification of approval, that would be inconsistent with GASB guidance for voluntary nonexchange transactions. As explained under the heading Accounting for Operating Grants in the Special Revenue Funds section of this chapter, and in the Appendix, an eligibility requirement, incurrence of allowable costs, was not been met in the period in which notification occurred. Consequently, no recognition of the grant is permitted until the period in which qualifying expenditures/expenses have been incurred. 4-6 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, Case 4-4 (Cont’d) b. In the period in which expenditures (expenses at the government-wide level) have been made by recipient programs, expenditures and revenues will be reported in the statement of revenues, expenditures, and changes in fund balances of the governmental funds. Depending on which fund receives the grant revenues, they will be reported in either the General Fund column or as a special revenue fund. If the juvenile programs are accounted for by one or more special revenue funds, expenditures and revenues will be reported in a separate column of the governmental funds statement of revenues, expenditures, and changes in fund balances if the special revenue fund meets the criteria a major fund. If the fund does not meet the criteria as a major fund, its information will be reported along with the information of all other nonmajor governmental funds in a single column, but would be reported in a separate column of the combining statement of revenues, expenditures, and changes in fund balances prepared for all nonmajor governmental funds. Expenses and revenues will be reported in the Governmental Activities column of the government-wide statement of activities. An important issue, given the GASB guidance quoted in the case, is whether the grant reimbursements should be reported as program or general revenues in the statement of activities. GASB resolved that issue in subsequent implementation guidance by requiring that multipurpose grants, such as the one described in this case, be reported as Operating Grants and Contributions of the appropriate programs or functions in the statement of activities—i.e., as program revenues. The reason given is that program/function classification can be readily accomplished based on the programs for which the expenses were initially incurred. Solutions to Exercises and Problems 4-1. 4-2. The answers will differ from student to student, since each has a different annual report. The instructor may wish to have copies made of good examples of statements, charts, graphs, informative schedules, and tables. Some class discussion of the different presentations found by students is worthwhile. As a suggestion, you may ask students to carefully review the government-wide statement of net assets and statement of activities and comment on the usefulness of those two statements. 1. 2. 3. 4. 5. a. c. d. b. d. 6. 7. 8. 9. 10. a. c. c. b. b. 4-7 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions (Cont’d) 4-3. a. Calculation of Estimated Required Tax Anticipation Financing Estimated Expenditure Requirements: Budgeted expenditures, remainder of FY 2011 Current liabilities payable Estimated Resources Available: Cash on hand, April 1, 2011 Collections of budgeted FY 2011 revenues and delinquent property taxes, including interest and penalties $2,470,000 830,000 $3,300,000 740,000 1,100,000 Estimated Amount of Required Tax Anticipation Note Financing 1,840,000 $1,460,000 b. General Fund and Governmental Activities: CASH TAX ANTICIPATION NOTES PAYABLE Debits 1,460,000 Credits 1,460,000 c. General Fund: TAX ANTICIPATION NOTES PAYABLE EXPENDITURES—2011 CASH 1,460,000 36,500 Governmental Activities: TAX ANTICIPATION NOTES PAYABLE EXPENSES—INTEREST ON TANs CASH 1,460,000 36,500 1,496,500 1,496,500 (Note: Interest on notes is $1,460,000 X .05 X 6/12 =$36,500) 4-4. a. Revenues = levy – (.02 X levy) = .98 X levy = $2,660,000 Levy = $2,660,000 ÷ .98 = $2,714,286 (rounded to nearest dollar) Rate X (assessed valuation ÷ 100) = levy Rate = levy ÷ (assessed valuation ÷ 100) Rate = $2,714,286 ÷ 1,357,143 = $2.00 per $100 of assessed valuation 4-8 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions 4-4 (Cont’d) Debits Credits b. TAXES RECEIVABLE—CURRENT 2,714,286 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 54,286 REVENUES 2,660,000 c. CASH TAXES RECEIVABLE—CURRENT TAXES RECEIVABLE—DELINQUENT TAXES RECEIVABLE—CURRENT 2,540,000 2,540,000 174,286 174,286 ESTIMATED UNCOLLECTIBLE CURRENT TAXES ESTIMATED UNCOLLECTIBLE DELINQUENT TAXES 54,286 INTEREST AND PENALTIES RECEIVABLE ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES REVENUES 10,457 54,286 1,046 9,411 4-5. a. General Fund: INVENTORY OF SUPPLIES RESERVE FOR INVENTORY OF SUPPLIES 15,000 Governmental Activities: INVENTORY OF SUPPLIES EXPENSES (VARIOUS FUNCTIONS) 15,000 15,000 15,000 (Note: Inventory consumed = Beginning Inventory + Purchases – Ending inventory, or $140,000 + $720,000 - $155,000 = $705,000. This is the amount that expenses should equal for the year.) b. General Fund: INVENTORY OF SUPPLIES EXPENDITURES 15,000 15,000 FUND BALANCE RESERVE FOR INVENTORY OF SUPPLIES Governmental Activities: Same as part a 4-9 15,000 15,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions (Cont’d) 4-6. a. (1) May 1, 2011 Debits DUE FROM STATE GOVERNMENT DEFERRED REVENUES Credits 200,000 200,000 (Note: There are no eligibility requirements stipulated in the grant. Thus, the grant can be recorded upon notification. There are, however, time restrictions that half of the grant is to be used in each of the 2012 and 2013 fiscal years. Therefore, revenues cannot be recognized until the period for which use of the grant is intended.) (2) July 1, 2011 CASH DUE FROM STATE GOVERNMENT 100,000 DEFERRED REVENUES REVENUES 100,000 100,000 100,000 (3) During FY 2012 EXPENDITURES VOUCHERS PAYABLE (or CASH) (4) July 1, 2012 Same entries as part (2). 4-10 90,000 90,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions (Cont’d) 4-7. DADE CITY GENERAL JOURNAL APPROPRIATIONS Debits 6,224,000 ESTIMATED OTHER FINANCING USES Credits 2,776,000 ESTIMATED REVENUES 7,997,000 BUDGETARY FUND BALANCE 1,003,000 REVENUES 7,980,000 FUND BALANCE 982,000 EXPENDITURES 6,192,000 OTHER FINANCING USES 2,770,000 (Under the conditions stated, the $65,000 item should not be treated as an encumbrance. It would need to be reappropriated in the budget for the next fiscal year.) 4-8. a. Debits 1. 100,000 Enterprise Fund: CASH REVENUES Credits 100,000 Governmental Activities: EXPENSES—PUBLIC SAFETY CASH 2. General Fund: EXPENDITURES CASH 100,000 100,000 100,000 100,000 General Fund: CASH EXPENDITURES 1,000 Governmental Activities: CASH EXPENSES—GENERAL GOVERNMENT 1,000 1,000 4-11 1,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-8, a.2 (Cont’d) Debits Enterprise Fund: SUPPLIES EXPENSE CASH 3. Credits 1,000 1,000 General Fund: INTERFUND LOANS RECEIVABLE— NONCURRENT CASH FUND BALANCE RESERVE FOR INTERFUND LOANS RECEIVABLE—NONCURRENT 50,000 50,000 50,000 50,000 Governmental Activities: NO EFFECT Internal Service Fund: CASH INTERFUND LOANS PAYABLE— NONCURRENT 4. General Fund: OTHER FINANCING USES—INTERFUND TRANSFERS OUT CASH 50,000 50,000 80,000 80,000 Governmental Activities: NO EFFECT Debt Service Fund: CASH OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN 4-12 80,000 80,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-8, a. (Cont’d) Debits 5. General Fund: CASH OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN Credits 5,000 5,000 Governmental Activities: NO EFFECT Capital Projects Fund: OTHER FINANCING USES— INTERFUND TRANSFERS OUT CASH b. 5,000 5,000 Proprietary funds, such as the enterprise fund, measure total economic resources using the accrual basis of accounting. Since this is the same measurement focus and basis of accounting used at the government-wide level, there would be no difference between entries in the enterprise fund and a business-type activities journal. Note that although the internal service funds are proprietary funds focusing on total economic resources using the accrual basis of accounting, they are generally combined with governmental activities if they predominantly provide services to departments within the government rather than to enterprise funds. 4-13 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions CITY OF FAYETTEJOURNAL ENTRIES GENERAL LEDGER SUBSIDIARY LEDGER Debits Credits Debits Credits 4-9.a. General Fund: (1) ESTIMATED REVENUES 2,774,000 APPROPRIATIONS 2,693,000 BUDGETARY FUND BALANCE 81,000 Revenues Ledger: TAXES 1,943,000 LICENSES AND PERMITS 372,000 INTERGOVERNMENTAL REVENUE 397,000 MISCELLANEOUS REVENUES 62,000 Appropriations Ledger: GENERAL GOVERNMENT 471,000 PUBLIC SAFETY 886,000 PUBLIC WORKS 650,000 HEALTH AND WELFARE 600,000 MISCELLANEOUS APPROPRIATIONS 86,000 General Fund: (2) ENCUMBRANCES2011 931,000 RESERVE FOR ENCUMBRANCES2011 931,000 Encumbrances Ledger: GENERAL GOVERNMENT 58,000 PUBLIC SAFETY 250,000 PUBLIC WORKS 392,000 HEALTH AND WELFARE 160,000 MISCELLANEOUS 71,000 4-14 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) GENERAL LEDGER Debits SUBSIDIARY LEDGER Credits Debits Credits General Fund: (3) TAXES RECEIVABLE CURRENT 2,005,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 65,000 REVENUES 1,940,000 Revenues Ledger: TAXES 1,940,000 Governmental Activities: TAXES RECEIVABLE CURRENT 2,005,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 65,000 GENERAL REVENUES— PROPERTY TAXES 1,940,000 General Fund and Governmental Activities: (4) CASH 1,591,000 TAXES RECEIVABLE DELINQUENT 132,000 TAXES RECEIVABLE CURRENT 1,459,000 4-15 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) GENERAL LEDGER Debits SUBSIDIARY LEDGER Credits Debits General Fund: (5) EXPENDITURES2011 1,750,100 VOUCHERS PAYABLE 1,750,100 Expenditures Ledger: GENERAL GOVERNMENT 411,000 PUBLIC SAFETY 635,000 PUBLIC WORKS 254,000 HEALTH AND WELFARE 439,000 MISCELLANEOUS APPROPRIATIONS 11,100 Governmental Activities: EXPENSES—GENERAL GOVERNMENT* 422,100 EXPENSES—PUBLIC SAFETY 635,000 EXPENSES—PUBLIC WORKS 254,000 EXPENSES—HEALTH AND WELFARE 439,000 VOUCHERS PAYABLE 1,750,100 *Assuming Miscellaneous Appropriations relate to General Government General Fund: (6) At beginning of 2011 to reestablish encumbrances: ENCUMBRANCES—2010 14,000 FUND BALANCE 14,000 Encumbrances Ledger2010: PUBLIC SAFETY 14,000 4-16 Credits Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (6) (Cont’d) GENERAL LEDGER Debits SUBSIDIARY LEDGER Credits Debits Credits RESERVE FOR ENCUMBRANCES—2010 14,000 ENCUMBRANCES—2010 14,000 Encumbrances Ledger2010: PUBLIC SAFETY 14,000 EXPENDITURES2010 14,000 EXPENDITURES2011 470 VOUCHERS PAYABLE 14,470 Expenditures Ledger2011: PUBLIC SAFETY 470 Expenditures Ledger2010: PUBLIC SAFETY 14,000 Governmental Activities: EXPENSES—PUBLIC SAFETY 14,470 VOUCHERS PAYABLE 14,470 General Fund: (7) RESERVE FOR ENCUMBRANCES2011 851,200 ENCUMBRANCES2011 EXPENDITURES2011 851,200 850,500 VOUCHERS PAYABLE 850,500 4-17 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (7) (Cont’d) GENERAL LEDGER SUBSIDIARY LEDGER Debit Credit Debit Credit Encumbrances Ledger: GENERAL GOVERNMENT 52,200 PUBLIC SAFETY 240,900 PUBLIC WORKS 357,000 HEALTH AND WELFARE 130,100 MISCELLANEOUS APPROPRIATIONS 71,000 Expenditures Ledger: GENERAL GOVERNMENT 52,700 PUBLIC SAFETY 236,200 PUBLIC WORKS 360,000 HEALTH AND WELFARE 130,600 MISCELLANEOUS APPROPRIATIONS 71,000 Governmental Activities: EXPENSES—GENERAL GOVERNMENT 123,700 EXPENSES—PUBLIC SAFETY 236,200 EXPENSES—PUBLIC WORKS 360,000 EXPENSES—HEALTH AND WELFARE 130,600 VOUCHERS PAYABLE 850,500 General Fund: (8) CASH 839,000 REVENUES 839,000 Revenues Ledger: LICENSES AND PERMITS 373,000 INTERGOVERNMENTAL REVENUE 400,000 MISCELLANEOUS REVENUES 66,000 4-18 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (8) (Cont’d) GENERAL LEDGER Debit Credit Governmental Activities: CASH 839,000 PROGRAM REVENUES— GENERAL GOVERNMENT— CHARGES FOR SERVICES 373,000 PROGRAM REVENUES— PUBLIC SAFETY— OPERATING GRANTS AND CONTRIBUTIONS 400,000 GENERAL REVENUES— MISCELLANEOUS 66,000 General Fund and Governmental Activities: (9) VOUCHERS PAYABLE 2,505,000 CASH 2,505,000 4-19 SUBSIDIARY LEDGER Debit Credit Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) Note: The Governmental Activities ledger is not shown here. CITY OF FAYETTE GENERAL FUND REVENUE LEDGER (NOT REQUIRED) ESTIMATED REVENUES REVENUES BALANCE Debit (Credit) TAXES (1) (3) (1) 1,943,000 1,940,000 LICENSES AND PERMITS 372,000 (8) (1) 373,000 INTERGOVERNMENTAL REVENUE 397,000 (8) (1) 400,000 MISCELLANEOUS REVENUES 62,000 (8) 66,000 4-20 1,940,000 3,000 372,000 (1,000) 397,000 (3,000) 62,000 (4,000) Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) GENERAL FUND APPROPRIATIONS/EXPENDITURES LEDGER (NOT REQUIRED) AVAILABLE TRANSACTION APPROPRIATION 1 2 5 7 GENERAL GOVERNMENT_______________________ 471,000 471,000 58,000 413,000 411,000 2,000 (52,200) 52,700 1,500 1 2 5 6 7 886,000 1 2 5 7 650,000 1 2 5 7 600,000 1 2 5 7 ENCUMBRANCE EXPENDITURE BALANCE PUBLIC SAFETY_________________________ 886,000 250,000 636,000 635,000 1,000 (Note A) 470 530 (240,900) 236,200 5,230 PUBLIC WORKS_________________________ 650,000 392,000 258,000 254,000 4,000 (357,000) 360,000 1,000 HEALTH AND WELFARE_____________________ 600,000 160,000 440,000 439,000 1,000 (130,100) 130,600 500 MISCELLANEOUS APPROPRIATIONS______________ 86,000 86,000 71,000 15,000 11,100 3,900 (71,000) 71,000 3,900 Note A: The Public Safety account shown here is for 2011. In addition, a credit of $14,000 would be made to the Public Safety subsidiary account for 2010, at which time that account would be placed in the “deadfile” with other 2010 subsidiary accounts that had been retired at the end of that fiscal year. 4-21 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) b. CITY OF FAYETTE GENERAL FUND BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED DECEMBER 31, 2011 VARIANCE WITH FINAL BUDGET OVER (UNDER) BUDGET (ORIGINAL AND FINAL) ACTUALA $1,943,000 $1,940,000 LICENSES AND PERMITS 372,000 373,000 1,000 INTERGOVERNMENTAL REVENUE 397,000 400,000 3,000 62,000 66,000 4,000 2,774,000 2,779,000 5,000 GENERAL GOVERNMENT 471,000 469,500 (1,500) PUBLIC SAFETY 886,000 880,770 (5,230) PUBLIC WORKS 650,000 649,000 (1,000) HEALTH AND WELFARE 600,000 599,500 (500) 86,000 82,100 (3,900) 2,693,000 2,680,870 (12,130) 81,000 98,130 17,130 -0- 65,800 65,800 81,000 163,930 82,930 96,900 96,900 - 0- $ 177,900 $ 260,830 $ 82,930 REVENUES: TAXES MISCELLANEOUS REVENUES TOTAL REVENUES $ (3,000) EXPENDITURES (BUDGET BASIS): MISCELLANEOUS APPROP. TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES INCREASE IN RESERVE FOR ENCUMBRANCES INCREASE IN FUND BALANCES FUND BALANCES, 1/1 B FUND BALANCES, 12/31 4-22 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-9 (Cont’d) NOTES: A The actual expenditures in this statement include encumbrances of 2011 appropriations outstanding at year-end, but do not include the expenditures of the 2010 appropriations recorded in entry 6. B Fund balances at 1-1 include reserve for encumbrances of $14,000 (see #6) and the balance of the (unreserved) fund balance account of $82,900 (see additional information after #9), or a total of $96,900. 4-10. a. CITY OF ASHLAND JOURNAL ENTRIES FY 2011 Debits Credits General Fund: (1) ESTIMATED REVENUES 3,140,000 APPROPRIATIONS 3,100,000 BUDGETARY FUND BALANCE 40,000 General Fund: (2) CASH 294,000 EXPENDITURES2011 6,000 TAX ANTICIPATION NOTES PAYABLE 300,000 (COMPUTATION OF DISCOUNT: $300,000 X .06 X 1/3 YEAR = $6,000.) Governmental Activities: CASH 294,000 EXPENSES—INTEREST ON TAX ANTICIPATION NOTES 6,000 TAX ANTICIPATION NOTES PAYABLE 4-23 300,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 a (Cont’d) Debits Credits General Fund: (3) TAXES RECEIVABLECURRENT 2,150,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 86,000 REVENUES 2,064,000 (COMPUTATIONS: $43,000,000 ASSESSED VALUATION X $5 TAX RATE PER $100 = $2,150,000 GROSS LEVY; $2,150,000 GROSS LEVY X .04 = $86,000 ESTIMATED UNCOLLECTIBLE.) Governmental Activities: TAXES RECEIVABLECURRENT 2,150,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 86,000 GENERAL REVENUES—PROPERTY TAXES 2,064,000 General Fund: (4) ENCUMBRANCES2011 2,059,000 RESERVE FOR ENCUMBRANCES2011 2,059,000 General Fund and Governmental Activities: (5) TAXES RECEIVABLECURRENT 25,000 REVENUES (General Revenues in Governmental Activities) 25,000 ($500,000 X $5 PER $100 OF VALUATION) General Fund and Governmental Activities: (6) CASH 2,364,840 TAXES RECEIVABLECURRENT TAXES RECEIVABLEDELINQUENT INTEREST AND PENALTIES RECEIVABLE 4-24 1,961,000 383,270 20,570 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 a (Cont’d) Debits Credits General Fund: (7) INTEREST AND PENALTIES RECEIVABLE 38,430 ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 11,529 REVENUES 26,901 Governmental Activities: INTEREST AND PENALTIES RECEIVABLE 38,430 ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 11,529 GENERAL REVENUES—INTEREST AND PENALTIES ON DELINQUENT TAXES 26,901 General Fund: (8) BUDGETARY FUND BALANCE 80,000 ESTIMATED REVENUES 80,000 (THIS ENTRY ADJUSTS THE ORIGINAL BUDGETARY INCREASE OF $40,000 IN BUDGETARY FUND BALANCE TO A NET DECREASE OF $40,000.) General Fund: (9) EXPENDITURES2011 819,490 DUE TO FEDERAL GOVERNMENT 166,400 DUE TO STATE GOVERNMENT 34,400 CASH 618,690 Governmental Activities: EXPENSES (function details omitted) DUE TO FEDERAL GOVERNMENT DUE TO STATE GOVERNMENT 819,490 166,400 34,400 CASH 618,690 4-25 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Debits Ch. 4, Solutions, 4-10 a (Cont’d) Credits General Fund: (10) EXPENDITURES2011 62,690 DUE TO FEDERAL GOVERNMENT 62,690 Governmental Activities: EXPENSES(function details omitted) 62,690 DUE TO FEDERAL GOVERNMENT 62,690 General Fund: (11) CASH 946,700 REVENUES 946,700 Governmental Activities: CASH 946,700 REVENUES(itemize as program or general and by source) 946,700 General Fund and Governmental Activities: (12) DUE TO FEDERAL GOVERNMENT DUE TO STATE GOVERNMENT 288,580 34,400 VOUCHERS PAYABLE 322,980 General Fund: (13) RESERVE FOR ENCUMBRANCES2011 1,988,040 ENCUMBRANCES2011 1,988,040 EXPENDITURES2011 1,987,570 VOUCHERS PAYABLE 1,987,570 Governmental Activities: EXPENSES(function details omitted) VOUCHERS PAYABLE 1,987,570 1,987,570 4-26 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Debits Ch. 4, Solutions, 4-10 a (Cont’d) Credits General Fund: (14) VOUCHERS PAYABLE 2,301,660 CASH 2,293,630 EXPENDITURES2011 8,030 Governmental Activities: VOUCHERS PAYABLE 2,301,660 CASH 2,293,630 EXPENSES(function detail omitted) 8,030 General Fund and Governmental Activities: (15) TAX ANTICIPATION NOTES PAYABLE 300,000 CASH 300,000 General Fund and Governmental Activities: (16) TAXES RECEIVABLE—DELINQUENT 214,000 TAXES RECEIVABLE—CURRENT 214,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 86,000 ESTIMATED UNCOLLECTIBLE DELINQUENT TAXES 86,000 General Fund: (17) INVENTORY OF SUPPLIES 3,000 RESERVE FOR INVENTORY OF SUPPLIES 3,000 Governmental Activities: INVENTORY OF SUPPLIES 3,000 EXPENSES (Function details omitted) 4-27 3,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 (Cont’d) Debits b. Credits CLOSING ENTRIES, APRIL 30, 2011 General Fund: APPROPRIATIONS 3,100,000 ESTIMATED REVENUES 3,060,000 BUDGETARY FUND BALANCE REVENUES 40,000 3,062,601 EXPENDITURES2011 2,867,720 FUND BALANCE 194,881 FUND BALANCE 70,960 ENCUMBRANCES2011 70,960 Governmental Activities: (Not closed here since the governmental activities general ledger includes operating statement transactions related to all governmental funds, not just those of the General Fund. See Chapter 9 for an example of closing the governmental activities temporary accounts.) 4-28 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 (Cont’d) c. CITY OF ASHLAND GENERAL FUND BALANCE SHEET AS OF APRIL 30, 2011 ASSETS CASH $ 490,220 TAXES RECEIVABLEDELINQUENT $413,730 LESS: ESTIMATED UNCOLLECTIBLE TAXESDELINQUENT 275,000 INTEREST AND PENALTIES RECEIVABLE 138,730 44,140 LESS: ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 22,689 MATERIAL AND SUPPLIES INVENTORY 21,451 19,100 TOTAL ASSETS $ 669,501 LIABILITIES AND FUND BALANCES LIABILITIES: VOUCHERS PAYABLE $157,390 FUND BALANCES RESERVED FOR INVENTORY OF SUPPLIES $ 19,100 RESERVED FOR ENCUMBRANCES2011 70,960 FUND BALANCE 90,060 422,051 TOTAL FUND BALANCES 512,111 TOTAL LIABILITIES AND FUND BALANCES 4-29 $ 669,501 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 (Cont’d) d. CITY OF ASHLAND GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED APRIL 30, 2011 REVENUES TAXES $2,089,000 INTEREST AND PENALTIES ON TAXES OTHER SOURCES 26,901 946,700 TOTAL REVENUES 3,062,601 EXPENDITURES SALARIES AND WAGES 882,180 INTEREST ON NOTE PAYABLE 6,000 OTHER 1,979,540 TOTAL EXPENDITURES 2,867,720 EXCESS OF REVENUES OVER EXPENDITURES INCREASE IN RESERVE FOR INVENTORY OF SUPPLIES FUND BALANCES, MAY 1, 2010 194,881 3,000 314,230 FUND BALANCES, APRIL 30, 2011 $ 512,111 Computations: Taxes = [4-10(3) 2,064,000 + 4-10(5) 25,000] Interest and Penalties on Taxes = [4-10(7) 26,901] Other Sources = [4-10(11) 946,700] Salaries and Wages = [4-10(9) 819,490) Interest on Notes Payable = [4-10(2) $6,000] Other = [4-10(13) 1,987,570 - 4-10(14) 8030] 4-30 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 (Cont’d) NOTE: The Governmental Activities general ledger is not shown here. CITY OF ASHLAND General Fund General Ledger (Not Required) 5/1/2010 Bal. Cash 97,000 4-10(2) 294,000 4-10(6) 2,364,840 4-10(11) 618,690 4-10(14) 2,293,630 4-10(15) 300,000 Interest and Penalties Rec.__ ____ 5/1/2010 Bal.26,280 4-10(6) 20,570 4-10(7) 38,430 4/30/2011 Bal 44,140 946,700 4/30/2011 Bal. 4-10(9) 490,220 4-10(3) Taxes ReceivableCurrent 2,150,000 4-10(6) 1,961,000 4-10(5) 25,000 4/30/2011 Bal. 4-10(16) 4-10(16) Est. Uncollectible Interest & Penalties _ 5/1/2010 Bal. 11,160 214,000 4-10(7) 11,529 -0- 4/30/2011 Bal. 22,689 Est. Uncollectible Current Taxes 4-10(3) 86,000 86,000 4/30/2011 Bal. -0- Inventory of Supplies_________ 5/1/2010 Bal.16,100 4-10(17) 3,000 4/30/2011 Bal. 19,100 Taxes ReceivableDelinquent 5/1/2010 Bal. 583,000 4-10(6) 383,270 4-10(15) 214,000 4/30/2011 Bal. 413,730 Reserve for Inventory of Supplies___ 5/1/2010 Bal. 16,100 4-10(17) 3,000 4/30/2011 Bal. 19,100 Est. Uncollectible Delinquent Taxes 5/1/2010 Bal.189,000 4-10(16) 86,000 4/30/2011 Bal. 275,000 Vouchers Payable___________ 4-10(14) 2,301,660 5/1/2010 Bal 148,500 4-10(12) 322,980 4-10(13) 1,987,570 4/30/2011 Bal. 157,390 NOTE: An underline under a number in a T-account indicates a point at which the account has a zero balance. 4-31 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-10 (Cont'd) Revenues____________ Due to Federal Government 4-10(12) 288,580 5/1/2010 Bal. 59,490 4-10. b 3,062,601 4-10(3) 2,064,000 4-10(9) 166,400 4-10(5) 25,000 4-10(10) 62,690 4-10(7) 26,901 -0- 4-10(11) 946,700 4/30/2011 Bal. 4-10(12) Due to State Government 34,400 4-10(9) Expenditures2011_________ 6,000 4-10(14) 8,030 34,400 -0- 4-10(9) 819,490 4-10(10) 4/30/2011 Bal. 4-10(2) 62,690 4-10. b 2,867,720 4-10(13) 1,987,570 4-10. b Fund Balance 70,960 5/1/2010 Bal. 298,130 4-10. b 194,881 Tax Anticipation Notes Payable_____ 4-10(15) 300,000 4-10(2) 300,000 4/30/2011 Bal. -0- 4/30/2011 Bal. 422,051 4-10(1) Estimated Revenues 4-10(8) 3,140,000 80,000 4-10. b 3,060,000 4-10. b Appropriations 4-10(1) 3,100,000 3,100,000 4-10(8) Budgetary Fund Balance 4-10(1) 80,000 4-10. b 40,000 40,000 4-32 ____ Encumbrances2011__________ 4-10(4) 2,059,000 4-10(13) 1,988,040 4-10. b 70,960 Reserve for Encumbrances2011___ 4-10(13) 1,988,040 4-10(4) 2,059,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions 4-11. a TOWN OF BENTON ALEX BENTON PARK ENDOWMENT FUND GENERAL JOURNAL FOR YEAR ENDED JUNE 30, 2011 Debits 1. DECEMBER 31, 2010: CASH 500,000 REVENUES—CONTRIBUTIONS FOR FOR ENDOWMENT 2. DECEMBER 31, 2010: INVESTMENT IN BONDS ACCRUED INTEREST RECEIVABLE CERTIFICATE OF DEPOSIT CASH Credits 500,000 406,300 6,000 70,000 482,300 3. JANUARY 2, 2011: NO ENTRY REQUIRED IN THE ENDOWMENT FUND. 4. MARCH 31, 2011: CASH REVENUES—INVESTMENT EARNINGS OTHER FINANCING USES—INTERFUND TRANSFERS OUT CASH 5. APRIL 1, 2011: CASH ACCRUED INTEREST RECEIVABLE REVENUES—INVESTMENT EARNINGS OTHER FINANCING USES—INTERFUND TRANSFERS OUT CASH 4-33 700 700 700 700 12,000 6,000 6,000 6,000 6,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 (Cont’d) Debits 6. JUNE 30, 2011: CASH REVENUES—INVESTMENT EARNINGS OTHER FINANCING USES—INTERFUND TRANSFERS OUT CASH Credits 700 700 700 700 7. JUNE 30, 2011: No entry required in the endowment fund. 8. JUNE 30, 2011: Note: The following entries are adjusting entries made to all bonds before 25% of them are sold. ACCRUED INTEREST RECEIVABLE (ALL BONDS) REVENUES—INVESTMENT EARNINGS ($400,000 x .06 x 3/12) 6,000 INVESTMENT IN BONDS REVENUES—CHANGE IN FAIR VALUE OF INVESTMENTS [($400,000 X 1.02) - $406,300] = $1,700 1,700 6,000 1,700 CASH 103,500 INVESTMENT IN BONDS ($400,000 x 1.02 x 25%) ACCRUED INTEREST RECEIVABLE (25%) (TO RECORD SALE OF BONDS) INVESTMENT IN STOCKS CASH (TO RECORD PURCHASE OF STOCKS) 4-34 102,000 1,500 104,000 104,000 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 (Cont’d) Debits OTHER FINANCING USES—INTERFUND TRANSFERS OUT CASH (OR DUE TO MAINTENANCE FUND) (NOTE: Change in fair value not included in earnings for transfer purposes) Credits 6,000 6,000 Closing entry: REVENUES—CONTRIBUTIONS FOR ENDOWMENT 500,000 REVENUES—INVESTMENT EARNINGS 13,400 REVENUES—CHANGE IN FAIR VALUE OF INVESTMENTS 1,700 OTHER FINANCING USES—OPERATING TRANSFERS OUT FUND BALANCE—RESERVED FOR ENDOWMENT (To close temporary accounts) 13,400 501,700 b. TOWN OF BENTON ALEX BENTON PARK MAINTENANCE FUND GENERAL JOURNAL FOR YEAR ENDED JUNE 30, 2011 1. DECEMBER 31, 2011: No entry required in Benton Park Maintenance Fund. 2. DECEMBER 31, 2011: No entry required in Benton Park Maintenance Fund. 3. JANUARY 2, 2011: ESTIMATED OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN APPROPRIATIONS BUDGETARY FUND BALANCE 4-35 13,400 13,000 400 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 (Cont’d) Debits 4. MARCH 31, 2011: CASH OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN 5. APRIL 1, 2011: CASH OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN 6. JUNE 30, 2011: CASH OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN 7. JUNE 30, 2011: EXPENDITURES—MATERIALS AND CONTRACTUAL SERVICES EXPENDITURES—WAGES AND SALARIES CASH VOUCHERS PAYABLE 8. JUNE 30, 2011: CASH (OR DUE FROM ENDOWMENT FUND) OTHER FINANCING SOURCES— INTERFUND TRANSFERS IN OTHER FINANCING SOURCES—OPERATING TRANSFERS IN EXPENDITURES—MATERIALS AND CONTRACTUAL SERVICES EXPENDITURES—WAGES AND SALARIES FUND BALANCE 4-36 Credits 700 700 6,000 6,000 700 700 2,700 10,150 12,420 430 6,000 6,000 13,400 2,700 10,150 550 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 b (Cont’d) Debits 13,000 400 APPROPRIATIONS BUDGETARY FUND BALANCE ESTIMATED OTHER FINANCING SOURCES c. (1) Credits 13,400 TOWN OF BENTON ALEX BENTON PARK ENDOWMENT FUND BALANCE SHEET AS OF JUNE 30, 2011 ASSETS CURRENT ASSETS: CASH ACCRUED INTEREST RECEIVABLE TOTAL CURRENT ASSETS INVESTMENTS: BONDS, AT PAR STOCKS CERTIFICATE OF DEPOSIT TOTAL INVESTMENTS TOTAL ASSETS $ 17,200 4,500 21,700 $306,000 104,000 70,000 480,000 $501,700 LIABILITIES AND FUND BALANCE LIABILITIES FUND BALANCE: FUND BALANCE—RESERVED FOR ENDOWMENT TOTAL LIABILITIES AND FUND BALANCE 4-37 $ -0501,700 $501,700 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 (Cont’d) (2) TOWN OF BENTON ALEX BENTON PARK ENDOWMENT FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR YEAR ENDED JUNE 30, 2011 REVENUES RECEIVED FOR CONTRIBUTION TO ENDOWMENT REVENUES EARNED FOR TRANSFER TO EXPENDABLE TRUST FUND: INTEREST ON BONDS INTEREST ON CERTIFICATE OF DEPOSIT TOTAL REVENUE EARNED FOR TRANSFER REVENUES FROM CHANGE IN FAIR VALUE OF INVESTMENTS TOTAL REVENUES OTHER FINANCING USES: OPERATING TRANSFERS TO ALEX BENTON PARK MAINTENANCE FUND EXCESS OF REVENUE OVER OTHER FINANCING USES FUND BALANCE, JULY 1, 2010 FUND BALANCE, JUNE 30, 2011 4-38 $500,000 $12,000 1,400 13,400 1,700 515,100 13,400 501,700 -0$501,700 Chapter 04 - Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements Ch. 4, Solutions, 4-11 (Cont’d) c. (1). TOWN OF BENTON ALEX BENTON PARK MAINTENANCE FUND BALANCE SHEET AS OF JUNE 30, 2011 ASSETS CASH TOTAL ASSETS $ $ 980 980 $ 430 430 550 980 LIABILITIES AND FUND BALANCE LIABILITIES: VOUCHERS PAYABLE TOTAL LIABILITIES FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE (2). $ TOWN OF BENTON ALEX BENTON PARK MAINTENANCE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR YEAR ENDED JUNE 30, 2011 REVENUES EXPENDITURES: MATERIALS AND CONTRACTUAL SERVICES WAGES AND SALARIES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES: OPERATING TRANSFERS IN INCREASE IN FUND BALANCE FUND BALANCE, JULY 1, 2010 FUND BALANCE, JUNE 30, 2011 4-39 $ $ 2,700 10,150 -0- 12,850 (12,850) 13,400 550 -0$ 550 ...
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