Government and Not-for-Profit Accounting
E. 9-3 Internal service funds are accounted for similarly to businesses
William County opted to account for its duplication service center in an internal service fund. Previously the center had been accounted for in the county’s general fund. During the first month in which it was accounted for as an internal service fund the center engaged in the following transactions:
1. Five copiers were transferred to the internal service fund from the government’s general capital assets. At the time of transfer the copiers had a book value (net of accumulated depreciation) of $70,000.
2. The general fund made an initial cash contribution of $35,000 to the internal service fund.
3. The center borrowed $270,000 from a local bank to finance the purchase of additional equipment and renovation of its facilities. It issued a three-year note.
4. It purchased equipment for $160,000 and paid contractors $100,000 for improvements to its facilities.
5. It billed the county clerk’s office $5,000 for printing services, of which the office remitted $2,500.
6. It incurred, and paid in cash, various operating expenses of $9,000.
7. The fund recognized depreciation of $1,500 on its equipment and $900 on the improvements to its facilities.
a. Prepare journal entries in the internal service fund to record the transactions.
b. Comment on the main differences resulting from the shift from the general fund to an internal service fund in how the center's assets and liabilities would be accounted for and reported
Click here for the solution: William County opted to account for its duplication service center in an internal service fund
Showing posts with label fund. Show all posts
Showing posts with label fund. Show all posts
Monday, April 18, 2016
Wednesday, October 7, 2015
Shawnee Co. set up a petty cash fund for payments of small amounts
Problem 8-2A (P8-2A) Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year):
May 1 Prepared a company check for $250 to establish the petty cash fund.
15 Prepared a company check both to replenish the fund for the following expenditures made since May 1 and to increase the fund to $450.
a. Paid $78 for janitorial services.
b. Paid $63.68 for miscellaneous expenses.
c. Paid postage expenses of $43.50.
d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement.
e. Counted $11.15 remaining in the petty cash box.
31 The petty cashier reports that $293.39 cash remains in the fund and decides that the May 15 increase in the fund was too large. A company check is drawn both to replenish the fund for the following expenditures made since May 15 and to reduce the fund to $400.
f. Paid postage expenses of $48.36.
g. Reimbursed the office manager for business mileage, $38.50.
h. Paid $39.75 to deliver merchandise to a customer, terms FOB destination.
Required
1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on those dates.
Analysis Component
2. Explain how the company’s financial statements are affected if the petty cash fund is not replenished and no entry is made on May 31.
Click here for the solution: Shawnee Co. set up a petty cash fund for payments of small amounts
May 1 Prepared a company check for $250 to establish the petty cash fund.
15 Prepared a company check both to replenish the fund for the following expenditures made since May 1 and to increase the fund to $450.
a. Paid $78 for janitorial services.
b. Paid $63.68 for miscellaneous expenses.
c. Paid postage expenses of $43.50.
d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement.
e. Counted $11.15 remaining in the petty cash box.
31 The petty cashier reports that $293.39 cash remains in the fund and decides that the May 15 increase in the fund was too large. A company check is drawn both to replenish the fund for the following expenditures made since May 15 and to reduce the fund to $400.
f. Paid postage expenses of $48.36.
g. Reimbursed the office manager for business mileage, $38.50.
h. Paid $39.75 to deliver merchandise to a customer, terms FOB destination.
Required
1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on those dates.
Analysis Component
2. Explain how the company’s financial statements are affected if the petty cash fund is not replenished and no entry is made on May 31.
Click here for the solution: Shawnee Co. set up a petty cash fund for payments of small amounts
Thursday, September 10, 2015
Presented here are several transactions and events of the General Fund of Johnson County
3–10. Presented here are several transactions and events of the General
Fund of Johnson County. All transactions and events relate to calendar
year 2009.
1. Estimated revenues from the following sources were legally budgeted.
Sales taxes $ 6,000,000
Fines and forfeits 2,000,000
Licenses and permits 1,750,000
Intergovernmental revenues 350,000
Total $10,100,000
2. Appropriations for the following functions were legally budgeted .
General government $2,100,000
Public safety 3,890,000
Culture and recreation 700,000
Health and welfare 3,000,000
Total $9,690,000
3. During the year, revenues were received in cash from the following sources:
Sales taxes $ 5,930,000
Fines and forfeits 1,990,000
Licenses and permits 1,740,000
Intergovernmental revenues 385,000
Total $10,045,000
4. During the year, contracts and purchase orders were issued as follows:
General government $ 450,000
Public safety 800,000
Culture and recreation 280,000
Health and welfare 500,000
Total $2,030,000
5. Goods and services (these are a portion of the total ordered in transaction 4) were received, as follows:
Estimated Actual
General government $ 450,000 $ 452,000
Public safety 500,000 510,000
Culture and recreation 275,000 276,000
Health and welfare 500,000 500,000
Total $1,725,000 $1,738,000
6. A budget revision was approved by the County Commission. Estimated revenues for intergovernmental revenues were increased by $35,000. Appropriations for general government were increased by $100,000.
7. Vouchers were issued for items not previously encumbered, primarily personal services, in the following amounts:
General government $1,747,000
Public safety 3,080,000
Culture and recreation 418,000
Health and welfare 2,500,000
Total $7,745,000
a. Record the transactions in general journal form. Include subsidiary accounts as illustrated in this chapter.
b. Open budgetary, revenue, expenditure, and encumbrance general ledger control accounts and post the transactions. You may use T-accounts.
c. Open Revenue and Appropriations, Expenditures, and Encumbrances subsidiary ledgers. Post the transactions. Prove that the control account balances agree with the related subsidiary ledger accounts.
d. Assume a beginning Fund Balance—Unreserved of $150,000. Prepare a budgetary comparison schedule for the General Fund. Include encumbrances with expenditures. Use Illustration 3–4 as an example.
e. Assuming that encumbered appropriations do not lapse at the end of the budget year, how much of the 2009 appropriations, by function, did lapse at the end of 2009? Show computations in good form.
Click here for the solution: Presented here are several transactions and events of the General Fund of Johnson County
1. Estimated revenues from the following sources were legally budgeted.
Sales taxes $ 6,000,000
Fines and forfeits 2,000,000
Licenses and permits 1,750,000
Intergovernmental revenues 350,000
Total $10,100,000
2. Appropriations for the following functions were legally budgeted .
General government $2,100,000
Public safety 3,890,000
Culture and recreation 700,000
Health and welfare 3,000,000
Total $9,690,000
3. During the year, revenues were received in cash from the following sources:
Sales taxes $ 5,930,000
Fines and forfeits 1,990,000
Licenses and permits 1,740,000
Intergovernmental revenues 385,000
Total $10,045,000
4. During the year, contracts and purchase orders were issued as follows:
General government $ 450,000
Public safety 800,000
Culture and recreation 280,000
Health and welfare 500,000
Total $2,030,000
5. Goods and services (these are a portion of the total ordered in transaction 4) were received, as follows:
Estimated Actual
General government $ 450,000 $ 452,000
Public safety 500,000 510,000
Culture and recreation 275,000 276,000
Health and welfare 500,000 500,000
Total $1,725,000 $1,738,000
6. A budget revision was approved by the County Commission. Estimated revenues for intergovernmental revenues were increased by $35,000. Appropriations for general government were increased by $100,000.
7. Vouchers were issued for items not previously encumbered, primarily personal services, in the following amounts:
General government $1,747,000
Public safety 3,080,000
Culture and recreation 418,000
Health and welfare 2,500,000
Total $7,745,000
a. Record the transactions in general journal form. Include subsidiary accounts as illustrated in this chapter.
b. Open budgetary, revenue, expenditure, and encumbrance general ledger control accounts and post the transactions. You may use T-accounts.
c. Open Revenue and Appropriations, Expenditures, and Encumbrances subsidiary ledgers. Post the transactions. Prove that the control account balances agree with the related subsidiary ledger accounts.
d. Assume a beginning Fund Balance—Unreserved of $150,000. Prepare a budgetary comparison schedule for the General Fund. Include encumbrances with expenditures. Use Illustration 3–4 as an example.
e. Assuming that encumbered appropriations do not lapse at the end of the budget year, how much of the 2009 appropriations, by function, did lapse at the end of 2009? Show computations in good form.
Click here for the solution: Presented here are several transactions and events of the General Fund of Johnson County
Tuesday, September 8, 2015
ACC 225 Week 8 Dane Co. establishes a $200 petty cash fund on January 1
ACC 225 Week 8
Exercise 8-5
Dane Co. establishes a $200 petty cash fund on January 1. One week later, the fund shows $28 in cash along with receipts for the following expenditures: postage, $64; transportation-in, $19; delivery expenses, $36; and miscellaneous expenses, $53. Dane uses the perpetual system in accounting for merchandise inventory. Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $500 on January 8, assuming no entry in part 2.
Check (3) Cr. Cash $472 (total)
Click here for the solution: ACC 225 Week 8 Dane Co. establishes a $200 petty cash fund on January 1
Exercise 8-5
Dane Co. establishes a $200 petty cash fund on January 1. One week later, the fund shows $28 in cash along with receipts for the following expenditures: postage, $64; transportation-in, $19; delivery expenses, $36; and miscellaneous expenses, $53. Dane uses the perpetual system in accounting for merchandise inventory. Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $500 on January 8, assuming no entry in part 2.
Check (3) Cr. Cash $472 (total)
Click here for the solution: ACC 225 Week 8 Dane Co. establishes a $200 petty cash fund on January 1
Sunday, September 6, 2015
The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
7-13 The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits. The fund is financed by actuarially determined contributions from the city’s General Fund and by contributions from employees. Administration of the retirement fund is handled by General Fund employees, and the retirement fund does not bear any administrative expenses. The Statement of Net Assets for the Employees’ Retirement Fund as of July 1, 2011, is shown here:
CITY OF SWEETWATER
Employees' Retirement Fund
Statement of Net Assets
As of July 1, 2011
Assets
Cash $ 50,000
Accrued interest receivable 135,000
Investments, at fair value:
Bonds 4,500,000
Common stocks 1,300,000
Total assets 5,985,000
Liabilities
Accounts payable and accrued expenses 350,000
Net assets held in trust for preparation for benefits $5,635,000
During the year ended June 30, 2012, the following transaction occurred:
The interest receivable on investments was collected in cash.
Member contributions in the amount of $400,000 were received in cash. The city’s General Fund also contributed $600,000 in cash.
Annuity benefits of $700,000 and disability benefits of $150,000 were recorded as liabilities.
Accounts payable and accrued expenses in the amount of $900,000 were paid in cash.
Interest income of $240,000 and dividends in the amount of $40,000 were received in cash. In addition, bond interest income of $140,000 was accrued at year-end.
Refunds of $130,000 were made in cash to terminated, nonvested participants.
Common stocks, carried at a fair value of $500,000, were sold for $480,000. That $480,000, plus an additional $300,000, was invested in stocks.
At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $50,000; the fair value of bonds had increased by $30,000.
Nominal accounts for the year were closed.
a.) Record the transactions on the books of the Employees’ Retirement Fund.
b.) Prepared a Statement of Changes in Net Assets for the Employees’ Retirement Fund for the Year Ended June 30, 2012.
c.) Prepare a Statement of Net Assets for the Employees’ Retirement Fund as of June 30, 2012.
Click here for the solution: The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
CITY OF SWEETWATER
Employees' Retirement Fund
Statement of Net Assets
As of July 1, 2011
Assets
Cash $ 50,000
Accrued interest receivable 135,000
Investments, at fair value:
Bonds 4,500,000
Common stocks 1,300,000
Total assets 5,985,000
Liabilities
Accounts payable and accrued expenses 350,000
Net assets held in trust for preparation for benefits $5,635,000
During the year ended June 30, 2012, the following transaction occurred:
The interest receivable on investments was collected in cash.
Member contributions in the amount of $400,000 were received in cash. The city’s General Fund also contributed $600,000 in cash.
Annuity benefits of $700,000 and disability benefits of $150,000 were recorded as liabilities.
Accounts payable and accrued expenses in the amount of $900,000 were paid in cash.
Interest income of $240,000 and dividends in the amount of $40,000 were received in cash. In addition, bond interest income of $140,000 was accrued at year-end.
Refunds of $130,000 were made in cash to terminated, nonvested participants.
Common stocks, carried at a fair value of $500,000, were sold for $480,000. That $480,000, plus an additional $300,000, was invested in stocks.
At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $50,000; the fair value of bonds had increased by $30,000.
Nominal accounts for the year were closed.
a.) Record the transactions on the books of the Employees’ Retirement Fund.
b.) Prepared a Statement of Changes in Net Assets for the Employees’ Retirement Fund for the Year Ended June 30, 2012.
c.) Prepare a Statement of Net Assets for the Employees’ Retirement Fund as of June 30, 2012.
Click here for the solution: The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 30, 2012
3-12 Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 30, 2012.
1. Estimated revenues (legally budgeted)
Property taxes $5,000,000
Sales taxes 4,000,000
Licenses and permits 1,500,000
Miscellaneous 500,000
2. Appropriations
General government 5,000,000
Culture and recreation 4,500,000
Health and welfare 1,000,000
3. Revenues received (cash)
Property taxes $4,783,541
Sales taxes 4,501,009
Licenses and permits 1,700,000
Miscellaneous 800,000
4. Encumbrances issued (includes salaries and other recurring items)
Estimated
General government 5,100,000
Culture and recreation 4,650,000
Health and welfare 905,000
5. Goods and services received (paid in cash)
Estimated Actual
General government 5,100,000 $5,035,450
Culture and recreation 4,650,000 4,610,000
Health and welfare 905,000 891,550
6. Budget revisions
Increase appropriations:
General government $100,000
Culture and recreation 150,000
7. Fund balance-Unrestricted on January 1 , 2012, was $735,000. There were no outstanding encumbrances at that date.
A. Record the transactions using the appropriate journal entries.
B. Prepare a budgetary comparison schedule for the General Fund.
Click here for the solution: Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 30, 2012
1. Estimated revenues (legally budgeted)
Property taxes $5,000,000
Sales taxes 4,000,000
Licenses and permits 1,500,000
Miscellaneous 500,000
2. Appropriations
General government 5,000,000
Culture and recreation 4,500,000
Health and welfare 1,000,000
3. Revenues received (cash)
Property taxes $4,783,541
Sales taxes 4,501,009
Licenses and permits 1,700,000
Miscellaneous 800,000
4. Encumbrances issued (includes salaries and other recurring items)
Estimated
General government 5,100,000
Culture and recreation 4,650,000
Health and welfare 905,000
5. Goods and services received (paid in cash)
Estimated Actual
General government 5,100,000 $5,035,450
Culture and recreation 4,650,000 4,610,000
Health and welfare 905,000 891,550
6. Budget revisions
Increase appropriations:
General government $100,000
Culture and recreation 150,000
7. Fund balance-Unrestricted on January 1 , 2012, was $735,000. There were no outstanding encumbrances at that date.
A. Record the transactions using the appropriate journal entries.
B. Prepare a budgetary comparison schedule for the General Fund.
Click here for the solution: Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 30, 2012
A government opts to set aside $10 million of general fund resources to finance a new city hall
1. A government opts to set aside $10 million of general fund resources to finance a new city hall. Construction is expected to begin in several years, when the city has been able to accumulate additional resources.
2. A government should distinguish underwriting and other issue costs from bond premiums and discounts and should
3. When a government issues bonds at premiums or discounts and records the proceeds in a capital projects fund, it should
4. A city holds U.S. Treasury notes as an investment in a capital projects fund. During the year the market value of the notes increases by $50,000. Of this amount, $14,000 can be attributed to a decline in prevailing interest rates and $36,000 to interest that has been earned but not yet received. As of year-end, the city should recognize as revenue
5. Which of the following accounts is least likely to be shown on the balance sheet of a debt service fund?
6. Special assessment debt should be reported on the balance sheet of a city if the debt is to be paid from assessments on property owners and
7. In its fund statements a government should recognize revenue from special assessments
8. In the year it imposes a special assessment, a government should recognize in its government-wide statements
9. Under existing federal statutes, arbitrage as it applies to state and local governments
10. Bond refunding are most likely to result in an economic gain when
Click here for the solution: A government opts to set aside $10 million of general fund resources to finance a new city hall
2. A government should distinguish underwriting and other issue costs from bond premiums and discounts and should
3. When a government issues bonds at premiums or discounts and records the proceeds in a capital projects fund, it should
4. A city holds U.S. Treasury notes as an investment in a capital projects fund. During the year the market value of the notes increases by $50,000. Of this amount, $14,000 can be attributed to a decline in prevailing interest rates and $36,000 to interest that has been earned but not yet received. As of year-end, the city should recognize as revenue
5. Which of the following accounts is least likely to be shown on the balance sheet of a debt service fund?
6. Special assessment debt should be reported on the balance sheet of a city if the debt is to be paid from assessments on property owners and
7. In its fund statements a government should recognize revenue from special assessments
8. In the year it imposes a special assessment, a government should recognize in its government-wide statements
9. Under existing federal statutes, arbitrage as it applies to state and local governments
10. Bond refunding are most likely to result in an economic gain when
Click here for the solution: A government opts to set aside $10 million of general fund resources to finance a new city hall
Wednesday, September 2, 2015
The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
2-9 The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012:
Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011
From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.
Click here for the solution: The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011
From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.
Click here for the solution: The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
Sunday, July 12, 2015
A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements
A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements. What is the most likely explanation for the difference?
Click here for the solution: A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements
Click here for the solution: A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements
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