Exam 21: Accounting for State and Local Governmental Units - Proprietary and Fiduciary Funds

The following transactions relate to a municipal golf course and tennis club,financed with debt secured by membership fees. 1.The General Fund loaned $25,000,000 cash to the Enterprise Fund.The note is not interest-bearing. 2.The municipal golf course and tennis club purchased land and constructed the facilities which totaled expenditures of $23,700,000. 3.Bonds were issued by the municipal golf course and tennis club for $20,000,000,par value of the bonds. 4.Membership fees were billed in the amount of $4,800,000.$4,200,000 was collected. 5.$5,000,000 was repaid to the general fund,with the anticipation of repaying $5,000,000 more per year for the next four years. Required: Prepare the necessary journal entries for each of the above transactions for the Enterprise Fund.

Static City started a department to provide copy,printing and mailing services for all departments and agencies of the city. During the fiscal year from July 1,2010 through June 30,2011,the copy services department had the following transactions: 1.Paper and toner inventory was purchased for $58,000,on account. 2.The paper and toner inventory physical count showed only $8,000 on hand at June 30,2011. 3.The department billed other departments for services rendered to them amounting to: General Fund,$43,000;Enterprise Fund,$24,000;Debt Service Fund,$21,000;and Trust Fund,$16,000.All receivables were collected with the exception of $6,000 from the Trust Fund which is expected to be collected in July,2011. 4.The department incurred and paid the following expenses: salaries and wages,$23,000;Electric,$8,000;Other operating expenses,$6,000.Also,$63,000 of the Accounts Payable were paid during the year. 5.Depreciation Expense on Equipment amounted to $6,000 for the year ending June 30,2011. 6.The department prepared the closing entry on June 30,2011. Required: For the fiscal year ended June 30,2011,prepare the journal entries to record the transactions for the Internal Service Fund.

The City's municipal golf course had the following transactions. 1.Received a beautification(operating)grant from the state for $600,000.Received cash of $600,000. 2.Incurred and paid qualifying expenses under the state grant program in (1)above of $280,000. 3.Incurred and paid construction costs on an uncompleted clubhouse for $1,200,000. 4.Received $1,000,000 cash from a grant to assist with construction costs for the clubhouse. Required: Given that the golf course is operated based on user fees for upkeep,prepare the necessary journal entries for each of these transactions.

The accounting equation for the enterprise fund is

An adjusted trial balance is provided below for the Dade County copy services department at June 30,2011. Required: 1.Prepare a statement of revenues,expenses and changes in net assets for the copy services department for the year ended June 30,2011. 2.Prepare a statement of net assets for the copy services department at June 30,2011.Assume all assets are not externally or internally restricted.

Journalize the following utility transactions in the Quest County Enterprise Fund: 1.Billings to external customers $1,600,000;billings to Quest County governmental funds $130,000. 2.Collected refundable deposits from new customers $10,000. 3.Collected 95% of all billings by fiscal year-end. 4.Refunded $4,000 in deposits to former customers. 5.Unbilled services to outside customers at year-end $14,000.

Enterprise funds are accounted for in a manner similar to

Journalize the following utility transactions in the Hazzard County Enterprise Fund: 1.The utility sold $4,000,000 of 6.5% revenue bonds at 98 on July 1,2011 (an interest payment date).The bond proceeds are to be used for new plant construction and the issue will mature in 20 years.Interest is paid semi-annually on July 1 and January 1. 2.Depreciation for the year-ended December 31,2011 included $300,000 for buildings and $190,000 for equipment. 3.The utility paid $600,000 in construction costs for the new plant. The plant is still under construction. 4.Interest on the revenue bonds was accrued at year-end,December 31,2011.Straight-line amortization is used for bond discounts and premiums.

Willborough County had the following transactions in 2012. 1.A central motor pool was established with a $200,000 nonreciprocal transfer from the General Fund. 2.The water and sewer authority,which provides services to residents for a fee,issued a bond offering at $750,000 par.Bonds proceeds are restricted to renovating the treatment facility. 3.Willborough received a grant from the state to be used for renovation of the courthouse amounting to $800,000.The General Fund will temporarily provide $100,000 cash,because the grant is set up on a reimbursement basis and will not be distributed until proper expenditures are documented. 4.Willborough's central motor pool bills out automobile usage to various government agencies amounting to $42,000. 5.The General Fund transfers $67,000 out of the operating budget to fund the county employees' pension plan. Required: Prepare the necessary journal entries for each of the above transactions for all funds affected.Be sure to identify the fund type for each entry.

What basis of accounting is used by proprietary funds?

A trust fund was created to assist local students in financial need.The following transactions occurred in the trust. 1.The committee forming the fund was able to raise $700,000 and invested the funds so that the principal would remain indefinitely,and the earnings would be used to aid needy students. 2.During the year,the fund earned $65,000 interest.Earnings remain invested in the trust until withdrawn to distribute,so the interest was invested. 3.$50,000 of the investments were sold,withdrawn,and distributed to provide scholarships. 4.The fund-raising committee contributed an additional $200,000 cash to the fund.This cash was deposited into the account and invested. 5.Interest earned but not yet deposited into the investment account was accrued at $17,000. Required: Prepare the necessary journal entries for each of the above transactions for the trust fund.

GASB requires ________ method(s)for the cash flow statement for proprietary funds.

The financial statements of a proprietary fund are similar to those of a business enterprise except for

Based upon the flow information provided below for the year ending December 31,2011,prepare a cash flow statement for the Downtown City Motor Pool,an internal service fund.

In a Statement of Cash Flows for a proprietary fund,what are the primary categories of cash flow activities?

The City of Sill established an Internal Service Fund to provide cleaning services to all city offices and departments.The following transactions took place with respect to this event. 1.The General Fund contributed cash of $49,000 to the Internal Service Fund.The General Fund provided a $10,000 loan to the Internal Service Fund. 2.On January 1,2011,the Internal Service Fund acquired a floor waxing machine for cash of $5,000.It has a 5 year life with no salvage value,and the city uses straight-line depreciation on their assets. 3.The cleaning services department billed other government agencies and departments $226,000 and collected $187,000. 4.The cleaning services department incurred and paid the following expenses: cleaning personnel wages,$65,000;payroll taxes,$10,000;cleaning supplies,$13,000;and office rental and utilities,$77,000.The cleaning services department also repaid the general fund for the loan. 5.The cleaning services department prepared the journal entry to depreciate their assets for the year ending December 31,2011. Required: Prepare the necessary journal entries for each of the above transactions for the Internal Service Fund.

The fixed assets and long-term liabilities associated with Proprietary Funds are reported on the

What basis of accounting is used by fiduciary funds?

Prepare journal entries to record the following grant-related transactions of an Enterprise Fund. 1.Received an operating grant in cash from the state,$2,500,000. 2.Incurred and paid qualifying operating expenses on the state grant program,$1,600,000. 3.Received a federal grant to finance construction of a plant,$4,500,000 (cash received in advance). 4.Incurred and paid construction costs on the plant,$3,000,000.The plant is not completed.

Journalize the following municipal zoo transactions in the Lackluster County Enterprise Fund: 1.The zoo issued $1,000,000 of 5% revenue bonds at 99 on July 1,2011 (an interest payment date).The bond proceeds are to be used for a new polar bear exhibit and the issue will mature in 20 years.Interest is paid on January 1 and July 1. 2.Depreciation for the year-ended December 31,2011 included $175,000 for buildings and $105,000 for outdoor exhibit areas. 3.The zoo paid $800,000 in construction costs for the new exhibit.The exhibit is still under construction. 4.Interest on the revenue bonds was accrued at year-end,December 31,2011.Straight-line amortization is used for bond discounts and premiums.