Exam 6: Proprietary Funds

All of the following are true about proprietary funds EXCEPT:

As of July 1, 2008, the City of Lockard decided to purchase a privately operated swimming pool and to create a Swimming Pool (Enterprise) Fund. During the year, the following transactions occurred: (a). A permanent contribution of $300,000 was received from the General Fund (b). Revenue Bonds were sold at par in the amount of $600,000 (c). Purchased for $800,000 cash several items, the cost breakdown was: land, $100,000; building, $200,000, land improvement, $200,000; equipment, $200,000; supplies, $100,000 (d). Charges for services amounted to $300,000, all received in cash (e). Cash expenses included: salaries, $100,000; utilities, $50,000; interest (paid on 6/30/09), $36,000 (f). Supplies were consumed in the amount of $80,000 (g). Depreciation was recorded for: building, $10,000, land improvement, $10,000; equipment, $20,000 (h). The books were closed. Close all accounts to Net Assets Required: Record the above transactions in general journal form (on the books of the swimming pool fund) Prepare, in good form, a Statement of Revenues, Expenses and Changes in Fund Net Assets for the City of Lockard Swimming Pool Fund for the Year Ended June 30, 2009 Prepare, in good form, a Statement of Fund Net Assets for the City of Lockard Swimming Pool Fund as of June 30, 2009 Prepare, in good form, a Statement of Cash Flows for the City of Lockard Swimming Pool Fund for the Year Ended June 30, 2009. Assume all of the revenue bonds payable are for capital-related acquisitions and that the transfer was to establish working capital (i.e. a non-capital-related purpose)

Budgetary comparison schedules are required for proprietary funds

Long-term liabilities of an enterprise fund should be reported in the: Proprietary Fund Government-Wide Statements Statements A) No No B) No Yes C) Yes Yes D) Yes No

Describe the accounting required by the GASB for municipal solid waste landfill closure and post closure care costs. (It is not necessary to describe footnote disclosures)

The City of Westboro established a Stores and Services Fund. To provide working capital, the Stores and Services Fund borrowed $800,000 from the General Fund, to be paid back over 8 years with no interest. The Stores and Services Fund is expected to set user charges at a level which will recover all expenses and provide cash for the repayment of the loan Data for the budget year are: Cost of supplies expected to be issued \ 4,000,000 Salaries 980,000 Utility expenses 130,000 Insurance and miscellaneous expenses 90,000 Capital assets used by the Stores and Services Fund include a building which cost $300,000 and had a 10 year life and equipment which cost $150,000 and had a 5 year life. Straight-line depreciation is to be used, with no salvage value Required: a. Prepare a break-even budget for the City of Westboro Stores and Services Fund. Include a mark up percentage, as a percentage of cost so that revenue will equal expenses b. Record the issuance of supplies, costing $16,500, to the Water Utility Fund. The perpetual inventory system is used. Show computations in good form

The Village of Lake George decided to establish an internal service fund to account for the operations of a Print Shop. The Print Shop is to begin operations on July 1, 2008 the first day of the City's fiscal year. During the fiscal year ended June 30, 2009 the following transactions occurred: (a). The General Fund made a permanent contribution of $1,200,000 and a long-term advance of $800,000 to the Print Shop Fund. The advance is to be repaid by the Print Shop Fund in four equal annual installments; the first installment is due 7/1/010. The advance is non-interest bearing and is considered issued for the purchases of equipment (b). During the year equipment was purchased (for cash) in the amount of $900,000 (c). During the year, printing supplies costing $800,000 were purchased; all but $30,000 was paid in cash (d). Billings to departments during the year totaled $2,400,000 at selling price. All but $450,000 was received in cash (e). The cost of supplies used during the year totaled $730,000; (f). Salaries and wages were $900,000 and utilities were $300,000 (all paid in cash); and (g). Depreciation was charged on equipment, $80,000 Required: Prepare journal entries in the general journal of the Village of Lake George Print Shop Fund to reflect the above transactions Prepare closing entries for the year Prepare, in good form, the equity section of the Statement of Net Assets for the Village of Lake George Print Shop Fund as of June 30, 2009

GASB requires that the reconciliation of income and cash flows from operations starts with operating income.

Capital projects constructed by an internal service fund are recorded in a capital projects fund.

Centralized purchasing, computer services and janitorial services are examples of activities that are commonly reported in:

Which of the following is not true regarding proprietary funds?

Describe the requirements for disclosure of segment information for enterprise funds

GASB requires the ____________ method to report cash flows from operating activities in the Statement of Cash Flows.

An example of an activity that would not normally be accounted for in an internal service fund would be:

The city is using an internal service fund to self-insure its risk financing activities. Claims accrued or paid by this fund are recorded as:

The estimated costs of closure of solid waste landfills are measured using:.

When preparing the Statement of Cash Flows for the Proprietary Fund, cash flows from noncapital financing activities include all of the following EXCEPT:

The Water Utility (an enterprise fund) has just sent out a purchase order to a vendor for some new equipment. Which of the following would be included in the journal entry to record this event?

The Village of Watkins Glenn operated an educational program for at-risk middle school children. Businesses and nonprofit organizations sponsor the children and pay the registration fee The following cash receipts were collected: Registration 160,000 Cash loan from bank 40,000 The following cash disbursements were made: Payroll taxes 20,250 Labor 85,200 Insurance 8,650 Interest 2.300 Purchase school bus 65,000 Required: A. Prepare the journal entries to record revenues and disbursements if the city treats the program as an enterprise fund B. Prepare the journal entries to record revenues and disbursements if the city treats the program as a special revenue fund

Postclosure costs are recorded in a solid waste landfill enterprise fund at the present value of estimated future costs.