Chapter 18, Modern Advanced accounting-review Q & exr

CHAPTER 18GOVERNMENTAL ENTITIES: OTHER GOVERNMENTAL

FUNDS AND ACCOUNT GROUPS

The title of each problem is followed by the estimated time in minutes required for completion and by a difficulty rating. The time estimates are applicable for students using the partially filled-in working papers.

Pr. 18–1 Ridge City (20 minutes, easy)Journal entries for a governmental entity's general capital assets account group.

Pr. 18–2 Town of Dilbey (30 minutes, medium)Financial statements for a governmental entity's capital projects fund at end of its first year of operations.

Pr. 18–3 Town of Logan (30 minutes, medium)Journal entries for two construction projects, in capital projects fund for project financed by general obligation bonds and in special revenue fund for project financed by special assessments bonds, of a governmental entity.

Pr. 18–4 Webster Village (30 minutes, medium)Given journal entries for a governmental entity general fund, prepare journal entries for other affected funds and account groups.

Pr. 18–5 Calabash County (30 minutes, medium)Prepare journal entries for funds and account groups for four transactions or events of a governmental entity.

Pr. 18–6 City of Arlette (30 minutes, medium)Journal entries for affected funds and account groups for a capital lease of a governmental entity.

Pr. 18–7 City of Ordway (40 minutes, medium)Preparation of journal entries and balance sheet for capital projects fund of a governmental entity.

Pr. 18–8 City of Wilmont (40 minutes, medium)Journal entries, including closing entries (explanations omitted), for capital projects fund of a governmental entity.

Pr. 18–9 Angelus School District (50 minutes, strong)Journal entries for transactions and events of general fund, capital projects fund, general capital assets account group, and general long-term debt account group of a governmental entity.

ANSWERS TO REVIEW QUESTIONS

1. Fees for rubbish collection, state gasoline taxes, and traffic violation fines, and proceeds of special assessments (including related bonds) are among the taxes or fees that often are accounted for in special revenue funds of a governmental entity.

2. The Town of Groman General Fund credits the Expenditures ledger account because the amount receivable from the Special Revenue Fund is a reimbursement of General Fund expenditures.

3. Proceeds of general obligation bonds issued at face amount by a governmental entity are accounted for as other financing sources of a capital projects fund because the proceeds are not revenues of that fund.

4. A separate debt service fund is not established for every issue of general obligation bonds of a governmental entity. In the absence of legal requirements for a debt service fund or of a formal plan for accumulation of a sinking fund, a debt service fund may be unnecessary.

The McGraw-Hill Companies, Inc., 2006Solutions Manual, Chapter 18 488

5. The probable explanation of the illustrated journal entry is to record payment of cash to a bank trust department acting as fiscal agent for the payment of bond principal and interest.

6. The recognition of depreciation of plant assets is appropriate for all assets of a governmental entity's general capital assets account group except for certain infrastructure and inexhaustible (land and certain works of art) assets.

7. The Investment in General Capital Assets from Gifts ledger account is credited for the current fair value of plant assets donated to a governmental entity for its general use, as opposed to use by a proprietary fund or a trust fund.

8. A balance sheet is not issued for a governmental entity's general capital assets account group because an account group is not a fund.

9. The journal entry in the Village of Marvell General Long-Term Debt Account Group is incorrect; Amount Available in Debt Service Fund should be debited, and Amount to Be Provided should be credited.

10. For a capital lease for fire engines, a governmental entity's general fund records the appropriations and expenditures for the lease payments; the general long-term debt account group records the liability under the capital lease; and the general capital assets account group records the leased assets under the capital lease and the related depreciation.

11. A liability for special assessment bonds is recorded in a governmental entity's general long-term debt account group if the governmental entity is obligated in some manner for the payment of the bonds if the assessed property owners default.

SOLUTIONS TO EXERCISES

Ex. 18–1

1. a 9. d

2. b 10. b3. b 11. d4. c 12. d5. a 13. c6. a 14. c7. b 15. d8. b 16. b

Ex. 18–2 Journal entries for County of Larchmont Special Revenue Fund, July, 2005:

Taxes ReceivableCurrent 480,000Allowance for Uncollectible Current Taxes ($480,000

x 0.015) 7,200Revenues 472,800

To accrue property taxes billed and to provide for estimated uncollectible portion.

Cash 142,700Taxes ReceivableCurrent 142,700

To record collection of property taxes during July, 2005

Ex. 18–3 Computation of present value of City of Garbo 6% serial bonds, July 1, 2005:

July 1, 2003 payment [($200,000 + $60,000) x 0.925926*)] $240,741July 1, 2004 payment [($200,000 + $48,000) x 0.857339*)] 212,620July 1, 2005 payment [($200,000 + $36,000) x 0.793832*)] 187,344July 1, 2006 payment [($200,000 + $24,000) x 0.735030*)] 164,647July 1, 2007 payment [($200,000 + $12,000) x 0.680583*)] 144,284

Present value of 6% serial bonds $949,636*From present value tables.

The McGraw-Hill Companies, Inc., 2006489 Modern Advanced Accounting, 10/e

Ex. 18–4 Journal entry for County of Pinecrest Capital Projects Fund, July 1, 2005:

Cash 1,200,000Other Financing Sources 1,200,000

To record receipt of proceeds of 30-year, 5% general obligation bonds issued at face amount.

Journal entry for County of Pinecrest General Long-Term Account Group, July 1, 2005:

Amount to Be Provided 1,200,000Term Bonds Payable 1,200,000

To record liability for 30-year, 5% general obligation bonds issued to finance construction of public health center.

Ex. 18–5 Journal entry for Town of Wallen Debt Service Fund, Apr. 30, 2006:

Matured Bonds Payable 50,000Matured Interest Payable ($50,000 x 0.08 x ½) 2,000

Cash with Fiscal Agent 52,000To record fiscal agent's payment of bond principal and interest.

Ex. 18–6 Journal entry in Bucolic Township General Fund, Mar. 18, 2006:

Other Financing Uses—Transfers Out 140,000Cash 140,000

Journal entry in Bucolic Township Debt Service Fund, Mar. 18, 2006:

Cash 140,000Other Financing Sources—Transfers In 140,000

Journal entry in Bucolic Township General Long-Term Debt Account Group, Mar. 18, 2006:

Amount Available in Debt Service Fund 140,000Amount to Be Provided 140,000

Ex. 18–7 Journal entries for Nemo County, Sept. 1, 2005:GF Expenditures 80,000

Cash 80,000

Fund Balance Reserved for Encumbrances 79,600Encumbrances 79,600

GCAAG Machinery and Equipment 80,000Investment in General Capital Assets from

General Fund Revenues 80,000

Ex. 18–8 Journal entries in Wildwood Village General Fund, Mar. 24, 2006:

Cash 40,000Other Financing Sources 40,000

Expenditures 450,000Cash 450,000

Fund Balance Reserved for Encumbrances 446,000Encumbrances 446,000


Journal entries in Wildwood Village General Capital Assets Account Group, Mar. 24, 2006:Investment in General Capital Assets from General Fund

Revenues 20,000Accumulated Depreciation of Machinery and Equipment 180,000

Machinery and Equipment 200,000

Machinery and Equipment 450,000Investment in General Capital Assets from General Fund

Revenues 450,000

Ex. 18–9 Journal entry for Town of Backwoods General Capital Assets Account Group, June 30, 2006:

Construction in Progress 950,000Investment in General Capital Assets from Capital

Projects Funds 950,000To record construction work in progress on town hall.

Ex. 18–10 Journal entry for Hays City General Capital Assets Account Group:

Land 850,000Investment in General Capital Assets from Gifts 850,000

To record gift of 10 acres of undeveloped land for future school site.

Ex. 18–11 Journal entry for Town of Noblisse General Fund, Apr. 30, 2006:

Cash 30,000Other Financing Sources 30,000

To record proceeds of disposal of computer.

Journal entry for Town of Noblisse General Capital Assets Account Group, Apr. 30, 2006:

Investment in General Capital Assets from General Fund Revenues 40,000

Accumulated Depreciation of Machinery and Equipment ($100,000 – $40,000) 60,000

Machinery 100,000To record disposal of computer.

Ex. 18–12 Journal entry for City of Rogell General Fund, July l, 2005:

Expenditures 20,000Cash 20,000

To record first lease payment on five-year capital lease for firefighting equipment.

Journal entries for City of Rogell General Long-Term Debt Account Group, July l, 2005:

Amount to Be Provided ($20,000 x 4.312127*) 86,243Liability under Capital Lease (net) 86,243

To record liability under five-year capital lease for firefighting equipment.

Liability under Capital Lease (net) 20,000Amount to Be Provided 20,000

To record General Fund payment of first lease payment on five-year capital lease for firefighting equipment.

*Present value of annuity due of one for five periods at 8%.

Journal entry for City of Rogell General Capital Assets Account Group, July l, 2005:

Leased Machinery and EquipmentCapital Lease 86,243


Investment in General Capital Assets from General Fund Revenues 86,243

To record acquisition of firefighting equipment under five-year capital lease.

Ex. 18–13 Journal entry for Town of Warren Capital Projects Fund, July l, 2005:

Cash ($254,000 x 0.909091*) + ($236,000 x 0.826446*) + ($218,000 x 0.751315*) 589,737

Other Financing Uses: Discount on Bonds Issued 10,263Other Financing Sources: Bonds Issued 600,000

To record issuance of $600,000 face amount of three-year, 9% special assessment bonds to yield 10%.

*From present value tables.

Journal entry for Town of Warren General Long-Term Debt Account Group, July l, 2005:

Amount to Be Provided 600,000Special Assessment Bonds Payable 600,000

To record issuance of 9% special assessment bonds for street improvement project; the town is obligated to honor deficiencies on payment of the bonds.

Ex. 18–14 1. d, f 5. a, b2. a, b, c 6. a, b3. f 7. a, b4. e

CASES

Case 18–1 The accounting for the installment contract proposed by the City of Darby controller results in an understatement of the city's plant assets and long-term debt. The installment contract may be considered a borrowing of cash repayable in installments and use of the cash to acquire the parking-lot equipment. The cost of the equipment should be recorded in the City of Darby voluntarily maintained General Capital Assets Account Group with a debit to Equipment and a credit to Investment in General Capital Assets from General Fund Revenues. The unpaid balance (including interest, if applicable) of the installment contract should be recorded in the City of Darby voluntarily maintained General Long Term Debt Account Group with a debit to Amount to Be Provided and a credit to Installment Contracts Payable. The monthly payments on the contract should be debited to the General Fund's Expenditures ledger account, as the controller proposes, with accompanying reductions in the memorandum accounts of the General Long-Term Debt Account Group.

Case 18–2 The proceeds of the special assessment for streetlighting and maintenance services to selected residents of the Town of Minimus should be accounted for in a special revenue fund, with reimbursements from that fund to the General Fund, together with expenditures for the streetlighting and maintenance services, accounted for in the City of DelVille General Fund. Similarly, a special revenue fund should be established to account for the proceeds of the special assessment to finance construction of the new town hall. Expenditures for construction, together with amounts received from the special revenue fund, should be accounted for in a capital projects fund. At the end of each fiscal year during the construction period, costs of the town hall construction should be recorded in the voluntarily maintained City of DelVille General Capital Assets Account Group.

Case 18–3 TO: James Milton, Controller, Wilburton


FROM: _____________________________, CPA

DATE: _____________________________

SUBJECT: Possible Closure of Selected Special Revenue Funds

After reviewing Sections 1300.105 of Governmental Accounting and Financial Reporting Standards, Governmental Accounting Standards Board (Norwalk: 2003), I have concluded that any Wilburton special revenue funds not mandated by state constitutional provisions or statutes or by Wilburton charter, ordinances, or governing body orders might possibly be closed. As pointed out in Section 1300.105: “Resources restricted to expenditure for purposes normally financed from the general fund may be accounted for through the general fund provided that applicable legal requirements can be appropriately satisfied . . .” Accordingly, I recommend that you undertake a review of Wilburton's 25 special revenue funds to ascertain which ones are legally mandated. All others may be candidates for closure, with their revenues and expenditures accounted for in the Wilburton General Fund. As indicated in the excerpt from Section 1300.105, any current special revenue fund whose expenditures generally are made by a governmental entity's general fund may be closed. Please call me if you need further consultation in this matter.

Case 18–4 Students who answer “No” to Professor Newton's question might rely on the rationale of the following excerpt from Section 1600.120 of Governmental Accounting and Financial Reporting Standards, GASB (Norwalk: 2003):

The major exception to the general rule of expenditure accrual…relates to unmatured principal and interest on general long-term debt, which includes special assessment debt for which the government is obligated in some manner. …Financial resources usually are appropriated in other funds for transfer to a debt service fund in the period in which maturing debt principal and interest must be paid. Such amounts thus are not current liabilities of the debt service fund as their settlement will not require expenditure of existing fund assets. Further, to accrue the debt service fund expenditure and liability in one period but record the transfer of financial resources for debt service purposes in a later period would be confusing and would result in overstatement of debt service fund expenditures and liabilities and understatement of the fund balance. Thus, disclosure of subsequent year debt service requirements is appropriate, but they usually are appropriately accounted for as expenditures in the year of payment.

However, students who answer “Yes” to Professor Newton's question might point out that interest expenditures over the period general obligation term bonds are outstanding may exceed the total principal of the bonds. For example, total interest expenditures of $1,200,000 must be made on an issue of $1,000,000 face amount of 20-year general obligation term bonds ($1,000,000 x 0.06 x 20 = $1,200,000). Thus, inclusion of the obligation for unmatured interest on general obligation term and serial bonds outstanding might well be appropriate for the accounting records of the general long-term debt account group instead of being relegated to a note to financial statements of the appropriate debt service fund.


Case 18–5 The engagement manager of the CPA firm that audited the City of Martinburg financial statements should explain to the Martinburg City Council that the Clinic Capital Projects Fund has insufficient resources to pay for the fund's present and potential liabilities. The negative balance of the Unreserved and Undesignated Fund Balance ledger account measures the approximate shortfall. The City Council will have to authorizeperhaps through a supplemental appropriationa subsidy from the City of Martinburg General Fund to enable the construction of the clinic to be completed.


20 Minutes, MediumRidge City Pr. 18–1

Ridge City General Capital Assets Account Group

Journal Entries

20 05

Oct 31 Machinery and Equipment 2 0 0 0 0

Investment in General Capital Assets from

General Fund Revenues 2 0 0 0 0

To record acquisition of equipment by General Fund.

Dec. 10 Land 1 0 0 0 0 0

Buildings 5 0 0 0 0 0

Investment in General Capital Assets from Gifts 6 0 0 0 0 0

To record, at current fair value, private citizen’s gift of

land and a building.

20 06

June 30 Construction in Progress 9 7 0 0 0 0


Capital Projects Funds 9 7 0 0 0 0

To record construction work in progress.

30 Investment in General Capital Assets from General

Fund Revenues 6 0 0 0 0

Investment in General Capital Assets from Capital

Projects Funds 1 4 0 0 0 0

Investment in General Capital Assets from Gifts 9 0 0 0 0

Accumulated Depreciation of Buildings 2 5 0 0 0 0

Accumulated Depreciation of Machinery and

Equipment 4 0 0 0 0

To recognize depreciation of buildings and machinery

and equipment.

30 Investment in General Capital Assets from Capital

Projects Funds 8 5 0 0 0 0

Accumulated Depreciation of Infrastructure 8 5 0 0 0 0

To recognize depreciation of infrastructure.


30 Minutes, MediumTown of Dilbey Pr. 18–2

Town of Dilbey Capital Projects Fund

Statement of Revenues, Expenditures, and Changes in Fund Balance

For Year Ended June 30, 2006

Revenues:

Miscellaneous $ 3 0 0 0 0

Expenditures:

Construction contracts $ 5 7 5 2 0 0

Engineering and other 1 8 0 8 0 0

Total expenditures $ 7 5 6 0 0 0

Excess (deficiency) of revenues over expenditures $( 7 2 6 0 0 0 )

Other financing sources (uses):

Face amount of general obligation bonds $1 0 0 0 0 0 0

Discount on general obligation bonds ( 9 8 9 6 4 )

Excess of revenues and other sources over

expenditures and other uses (fund balance, end of year) $ 1 7 5 0 3 6

Town of Dilbey Capital Projects Fund

Balance Sheet

June 30, 2006

Assets

Cash $ 2 7 6 0 3 6

Liabilities & Fund Balance

Liabilities:

Vouchers payable $ 1 0 1 0 0 0

Fund balance:

Reserved for encumbrances $ 2 2 7 6 0 0

Unreserved and undesignated ( 5 2 5 6 4 ) 1 7 5 0 3 6

Total liabilities & fund balance $ 2 7 6 0 3 6


30 Minutes, MediumTown of Logan Pr. 18–3

a. Town of Logan Town Hall Capital Projects Fund

Journal Entries


Cash 6 0 0 0 0 0

Other Financing Sources 6 0 0 0 0 0

To record issuance, at face amount, of 20-year, 7%

general obligation term bonds due July 1, 2025,

interest payable Jan. 1 and July 1.

Encumbrances 5 3 0 2 0 0

Fund Balance Reserved for Encumbrances 5 3 0 2 0 0

To record encumbrances for the year.

Expenditures 3 8 0 6 0 0

Vouchers Payable 3 8 0 6 0 0

To record expenditures for the year.



To reverse encumbrances applicable to vouchered

expenditures.

Vouchers Payable 3 2 2 7 0 0

Cash 3 2 2 7 0 0

To record payment of vouchers during the year.

b. Town of Logan Special Revenue Fund

Journal Entries


Special Assessments Receivable—Current

($400,000 ÷ 5) 8 0 0 0 0

Special Assessments Receivable—Deferred 3 2 0 0 0 0

Revenue 8 0 0 0 0

Deferred Revenues 3 2 0 0 0 0

To record special assessment levied on property

owners benefited by curbing project.

Cash 8 0 0 0 0

Special Assessment Receivable—Current 8 0 0 0 0

To record receipt of current special assessment

payments.

Other Financing Uses 8 0 0 0 0

Cash 8 0 0 0 0

To record transfer of cash for financing of curbing

project to Capital Projects Fund established for

that purpose.

(Continued on page 498.)


Town of Logan (concluded) Pr. 18–3

Town of Logan Special Revenue Fund

Journal Entries (concluded)


Interest Receivable ($320,000 x 0.08) 2 5 6 0 0

Revenue 2 5 6 0 0

To accrue interest on deferred special assessments

on June 30, 2006.

Expenditures [$80,000 + ($320,000 x 0.075)] 1 0 4 0 0 0

Matured Bonds Payable 8 0 0 0 0

Matured Interest Payable 2 4 0 0 0

To record expenditures for principal and interest on

special assessment bonds due July 1, 2006.

Special Assessment Receivable—Current 8 0 0 0 0

Deferred Revenues 8 0 0 0 0Special Assessments Receivable—DeferredS

8 0 0 0 0

Revenues 8 0 0 0 0

To transfer special assessment installment receivable

on July 1, 2006, and related revenue to the current

category from the deferred category.


30 Minutes, MediumWebster Villiage Pr. 18–4

Webster Village Capital Projects Fund

Journal Entry

20 05

July 3 Receivable from General Fund 1 5 0 0 0

Other Financing Sources—Transfers In 1 5 0 0 0

To record receivable from General Fund for

transfer to make up cash deficiency.

Webster Village Debt Service Fund

Journal Entry

20 05

Aug 31 Cash 2 1 0 0 0 0

Other Financing Sources—Transfers In 2 1 0 0 0 0

To record receipt of cash from General Fund for

payment of term bond principal ($200,000) and interest

($10,000) maturing on August 31, 2005.

Webster Village General Long-Term Debt Account Group

Journal Entry

20 05

Aug 31 Amount Available in Debt Service Fund 2 0 0 0 0 0

Amount to Be Provided 2 0 0 0 0 0

To record amount received by Debt Service Fund

from General Fund for retirement of principal of

general obligation term bonds.

Webster Village General Capital Assets Account Group

Journal Entries

20 05

Nov 30 Machinery and Equipment 6 0 0 0 0



To record acquisition of computer by General Fund.

20 06

June 30 Investment in General Capital Assets from General

Fund Revenues ($60,000 x 1/5 x 7/12) 7 0 0 0

Accumulated Depreciation of Machinery and

Equipment 7 0 0 0

To recognize depreciation of computer for seven

months ended June 30, 2006.


Webster Village (concluded) Pr. 18–4

Webster Village Special Revenue Fund

Journal Entry

20 06

Jan 2 Cash 2 0 0 0 0

Other Financing Sources—Transfers In 2 0 0 0 0

To record transfer from General Fund for

share of street-paving project cost in Westside section.


30 Minutes, MediumCalabash County Pr. 18–5

Calabash County Gasoline Tax Special Revenue Fund

Journal Entry

20 05

July 1 Estimated Revenues 6 4 0 0 0 0

Appropriations 6 0 0 0 0 0

Budgetary Fund Balance 4 0 0 0 0

To record annual budget adopted for Fiscal Year 2006.

Calabash County Capital Projects Fund

Journal Entry

20 05

July 5 Encumbrances 5 0 0 0 0 0 0

Fund Balance Reserved for Encumbrances 5 0 0 0 0 0 0

To record execution of contract for construction of

new public library.

Calabash County Special Assessment Special Revenue Fund

Journal Entry

20 05

Aug 1 Special Assessments Receivable—Current

($400,000 ÷ 5) 8 0 0 0 0

Special Assessments Receivable—Deferred 3 2 0 0 0 0

Revenue 8 0 0 0 0

Deferred Revenues 3 2 0 0 0 0

To record special assessment on property owners of

North Subdivision for construction of sidewalks;

special assessments receivable and related revenue

applicable to year ending June 30, 2006, are current,

and the balance is deferred.

Calabash County General Fund

Journal Entries

20 05

Sept 1 Expenditures 2 0 0 0 0

Cash (or Vouchers Payable) 2 0 0 0 0

To record acquisition of equipment.

1 Fund Balance Reserved for Encumbrances 1 9 6 0 0

Encumbrances 1 9 6 0 0

To reverse encumbrances applicable to expenditure

for equipment



Calabash County (concluded) Pr. 18–5

Calabash County General Capital Assets Account Group

Journal Entry

20 05

Sept 1 Machinery and Equipment 2 0 0 0 0



To record acquisition of equipment by General Fund.


30 Minutes, MediumCity of Arlette Pr. 18–6

City of Arlette General Fund

Journal Entries

20 05

July 1 Expenditures 3 0 0 0

Cash 3 0 0 0

To record first lease payment on three-year capital

lease for computer.

20 06

July 1 Expenditures ($510 interest + $2,490 principal) 3 0 0 0

Cash 3 0 0 0

To record second lease payment on three-year capital

lease for computer.

20 07

July 1 Expenditures ($268 interest + $2,714 principal) 3 0 0 0

Cash 3 0 0 0

To record third lease payment on three-year capital

lease for computer.

20 08

June 30 Expenditures ($41 interest + $459 principal) 5 0 0

Cash 5 0 0

To record payment of bargain-purchase option under

capital lease for computer.

City of Arlette General Long-Term Debt Account Group

Journal Entries

20 05

July 1 Amount to Be Provided [($3,000 x 2.759111) +

($500 x 0.772183)] 8 6 6 3

Liability under Capital Lease (net) 8 6 6 3

To record liability under three-year capital lease for

computer.

1 Liability under Capital Lease (net) 3 0 0 0

Amount to Be Provided 3 0 0 0

To record General Fund payment of first lease

payment on three-year capital lease for computer.

20 06

July 1 Liability under Capital Lease (net) 2 4 9 0


To record General Fund payment of second lease




City of Arlette (concluded) Pr. 18–6

City of Arlette General Long-Term Debt Account Group


20 07

July 1 Liabilities under Capital Lease (net) 2 7 1 4


To record General Fund payment of third lease


20 08

June 30 Liability under Capital Lease (net) 4 5 9

Amount to Be Provided 4 5 9

To record General Fund payment of bargain-purchase

option under three-year capital lease for computer.

City of Arlette General Capital Assets Account Group

Journal Entries

20 05

July 1 Leased Equipment—Capital Lease 8 6 6 3


General Fund Revenues 8 6 6 3

To record acquisition of computer under three-year

capital lease.

20 06

June 30 Investment in General Capital Assets from General

Fund Revenues ($8,663 ÷ 4) 2 1 6 6

Accumulated Depreciation of Equipment 2 1 6 6

To recognized depreciation of leased computer for

the year ended June 30, 2006.

(The same depreciation journal entries would be

prepared on June 30, 2007, June 30, 2008, and June

20, 2009.)


40 Minutes, MediumCity of Ordway Pr. 18–7

a. City of Ordway Library Capital Projects FundJournal Entries

For Year Ended June 30, 200720 06

July 1 Cash 5 1 0 0 0 0 0

Other Financing Sources: Bonds Issued 5 0 0 0 0 0 0

Other Financing Sources: Premium on Bonds

Issued 1 0 0 0 0 0

To record issuance of 30-year, 9%, $5,000,000 face

amount general obligation term bonds due July 1, 2036

interest payable June 30 and December 31.

3 Investments 4 9 0 0 0 0 0

Cash 4 9 0 0 0 0 0

To record acquisition of $4,900,000 face amount of

short-term notes.

5 Encumbrances 4 9 8 0 0 0 0


To record construction-type contract with Premier

Construction Company.

20 07

Jan 15 Cash 3 0 4 0 0 0 0

Investments 3 0 0 0 0 0 0

Payable to Library Debt Service Fund 4 0 0 0 0

To record receipt of cash for matured short-term notes.

15 Payable to Library Debt Service Fund 4 0 0 0 0

Cash 4 0 0 0 0

To record transfer of cash to Library Debt Service

Fund.

20 Expenditures 3 0 0 0 0 0 0

Vouchers Payable 3 0 0 0 0 0 0

To record billing from Premier Construction Company.

20 Fund Balance Reserved for Encumbrances 3 0 0 0 0 0 0

Encumbrances 3 0 0 0 0 0 0

To reverse encumbrance applicable to vouchered

expenditure.

20 Vouchers Payable 2 7 0 0 0 0 0

Cash 2 7 0 0 0 0 0

To record payment to Premier Construction Company.

June 30 Interest Receivable ($140,000 – $40,000) 1 0 0 0 0 0

Payable to Library Debt Service Fund 1 0 0 0 0 0

To accrue interest on short-term notes.

30 Unreserved and Undesignated Fund Balance

($4,980,000 – $3,000,000) 1 9 8 0 0 0 0


To close Encumbrances ledger account.



City of Ordway (concluded) Pr. 18–7

City of Ordway Library Capital Project Fund



20 07

June 30 Other Financing Sources: Bonds Issued 5 0 0 0 0 0 0

Other Financing Sources: Premium on Bonds Issued 1 0 0 0 0 0

Expenditures 3 0 0 0 0 0 0

Unreserved and Undesignated Fund Balance 2 1 0 0 0 0 0

To close Other Financing Sources and Expenditures

ledger accounts.

b. City of Ordway Library Capital Projects Fund

Balance Sheet

June 30, 2007

Assets

Cash $ 5 0 0 0 0 0

Interest receivable 1 0 0 0 0 0

Investments 1 9 0 0 0 0 0

Total assets $2 5 0 0 0 0 0

Liabilities & Fund Balance

Liabilities:

Vouchers payable $ 3 0 0 0 0 0

Payable to Library Debt Service Fund 1 0 0 0 0 0 $ 4 0 0 0 0 0

Fund balance:

Reserved for encumbrances $1 9 8 0 0 0 0

Unreserved and undesignated 1 2 0 0 0 0 2 1 0 0 0 0 0

Total liabilities & fund balance $2 5 0 0 0 0 0


40 Minutes, MediumCity of Wilmont Pr. 18–8

City of Wilmont Civic Center Capital Projects FundJournal Entries

For Year Ended June 30, 2006(1) Receivable from State Government 5 0 0 0 0 0 0

Revenue 5 0 0 0 0 0 0

Cash 5 0 0 0 0 0

Payable to General Fund 5 0 0 0 0 0

(2) Expenditures 3 2 0 0 0 0

Cash 3 2 0 0 0 0

(3) Cash [($10,000,000 x 0.171929) + ($400,000 x

18.401584)] 9 0 7 9 9 2 4

Other Financing Uses: Discount on Bonds Issued 9 2 0 0 7 6


(4) Encumbrances 12 0 0 0 0 0 0


(5) Encumbrances 5 5 0 0 0

Fund Balance Reserved for Encumbrances 5 5 0 0 0

(6) Cash 2 5 0 0 0 0 0

Receivable from State Government 2 5 0 0 0 0 0

(7) Expenditures 5 1 0 0 0

Vouchers Payable 5 1 0 0 0

Fund Balance Reserved for Encumbrances 5 5 0 0 0

Encumbrances 5 5 0 0 0

Vouchers Payable 5 1 0 0 0

Cash 5 1 0 0 0

(8) Expenditures 2 0 0 0 0 0 0

Vouchers Payable 2 0 0 0 0 0 0



(9) Payable to General Fund 5 0 0 0 0 0

Cash 5 0 0 0 0 0

Unreserved and Undesignated Fund Balance

($12,000,000 – $2,000,000) 10 0 0 0 0 0 0


Revenue 5 0 0 0 0 0 0


Expenditures ($320,000 + $51,000 +

$2,000,000) 2 3 7 1 0 0 0

Unreserved and Undesignated Fund Balance 11 7 0 8 9 2 4

Other Financing Uses: Discount on Bonds

Issued 9 2 0 0 7 6


50 Minutes, StrongAngelus School District Pr. 18–9

a. Angelus School District General Fund

Journal Entries

20 05

Jan 1 Estimated Revenues ($112,000 + $4,000) 1 1 6 0 0 0

Budgetary Fund Balance ($128,000 – $72,880) 5 5 1 2 0

Appropriations ($120,000 + $1,120 + $50,000) 1 7 1 1 2 0

To record annual budget adopted for 2005.

1 Taxes Receivable—Current 1 1 2 0 0 0

Revenues 1 1 2 0 0 0

To accrue property taxes billed.

Feb 28 Cash 4 9 5 0 0

Expenditures 5 0 0

Taxes Receivable—Current ($49,500 ÷ 0.99) 5 0 0 0 0

To record collections of property taxes received from

county treasurer, net of 1% fee.

Apr 1 Cash (or Receivable from Capital Projects Fund) 2 8 7 5 0

Revenues ($1,000,000 x 0.01) 1 0 0 0 0

Expenditures ($1,000,000 x 0.075 x 3/12) 1 8 7 5 0

To record receipt of bond premium and accrued

interest from Capital Projects Fund.

May 1 Cash 3 0 0 0

Revenues 3 0 0 0

To record receipt of interest on short-term investments

($100,000 x 0.06 x ½ = $3,000).

July 1 Expenditures 3 7 5 0 0

Cash 3 7 5 0 0

To record payment of interest on general obligation

bonds ($1,000,000 x 0.075 x ½ = $37,500).

Aug 31 Cash 5 9 4 0 0

Expenditures 6 0 0

Taxes Receivable—Current ($59,400 ÷ 0.99) 6 0 0 0 0

To record collections of property taxes received from

county treasurer, net of 1% fee.

Nov 1 Cash 3 0 0 0

Revenues 3 0 0 0

To record receipt of interest on temporary investments

($100,000 x 0.06 x ½ = $3,000).

Dec 31 Expenditures 1 1 5 0 0 0

Cash 1 1 5 0 0 0

To record operating expenditures paid during year.


Angelus School District (continued) Pr. 18–9

b. Angelus School District Capital Projects Fund

Journal Entries

20 05

Apr 1 Cash 1 0 2 8 7 5 0


Other Financing Sources: Premium on Bonds

Issued ($1,000,000 x 0.01) 1 0 0 0 0

Accrued Interest ($1,000,000 x 0.075 x 3/12) 1 8 7 5 0

To record receipt of proceeds of general obligation

term bonds issued at 101.

1 Premium on Bonds Issued 1 0 0 0 0

Accrued Interest 1 8 7 5 0

Cash (or Payable to General Fund) 2 8 7 5 0

To record payment of bond premium and accrued

interest to General Fund.

2 Expenditures 1 4 7 0 0 0

Cash 1 4 7 0 0 0

To record acquisition of site for new school.

3 Encumbrances 8 5 0 0 0 0


To record estimated cost of construction of new school

under contract signed.

Nov 1 Expenditures 2 0 0 0 0 0

Cash 2 0 0 0 0 0

To record payment of progress billing under

construction contract.

1 Fund Balance Reserved for Encumbrances 2 0 0 0 0 0


To reverse encumbrances applicable to payment to

contractor.


Angelus School District (concluded) Pr. 18–9

c. Angelus School District General Capital Assets Account Group

Journal Entry

20 05

Apr 2 Land 1 4 7 0 0 0


Capital Projects Fund 1 4 7 0 0 0

To record cost of land for site of new school.

d. Angelus School District General Long-Term Debt Account Group

Journal Entry

20 05

Apr 1 Amount to Be Provided 1 0 0 0 0 0 0

Term Bonds Payable 1 0 0 0 0 0 0

To record issuance of general obligation term bonds

for new school.

Note to Instructor: Because closing entries are not

required, there is no Dec. 31, 2005, journal entry in the

General Capital Assets Account Group for the

accumulated construction costs for the new school

in the Capital Projects Fund on that date, and no Dec.

31, 2005, journal entry in the General Long-Term Debt

Account Group for cash available in the General Fund

for payment of general obligation bonds.


Documents

Chapter 18, Modern Advanced accounting-review Q & exr