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

Enterprise funds are accounted for in a manner similar to

Prepare journal entries to record the following grant-related transactions of the municipal swimming pool, which is funded primarily by membership fees. 1.Received an operating grant in cash from the state for $200,000, to be used for life-saving and first-aid training. 2.Incurred and paid qualifying expenses on the state grant program by providing training, $165,000. 3.Received a federal grant to finance purchase of an energy efficient heating system for the pool, $120,000 (cash received in advance). 4.New heating system installed and paid, $115,000.

Proprietary funds are required to prepare financial statements that include:

The accounting equation for the enterprise fund is

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

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 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.

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.

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.

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

Thoroughgood County has a municipal golf course and tennis club which is funded by the membership fees it charges.The club also has 6% bonds outstanding amounting to $20,000,000 on which it pays interest semi-annually.The club had the following transactions. 1.An addition to the golf clubhouse was added for $2,000,000, funded out of operations. 2.The following expenses were incurred and paid: $80,000 wages; $10,000 payroll taxes; $45,000 water bill; and $12,000 equipment repair. 3.Interest on the bonds was paid amounting to $600,000. 4.$5,000,000 of operating cash excess was repaid to the general fund for a previous loan. 5.Depreciation of $500,000 was recorded for the buildings. Required: Prepare the necessary journal entries for each of the above transactions for the Enterprise Fund.

Based upon the cash flow information provided below for the year ended December 31, 2011, prepare a cash flow statement for the Bloomfield Municipal Golf Course, an enterprise fund.

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.

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.

Prepare journal entries in the motor pool department of Hill County to record each of the following transactions. 1.The General Fund contributed $50,000 cash to the motor pool department.The motor pool department purchased four vehicles on July 1, 2011 by paying $50,000 down and borrowing $70,000 on a 5%, 3-year note. 2.Billed General Fund departments $430,000 for services provided to those departments.Billings to the Enterprise Fund totaled $210,000.All billings were collected by year-end(June 30, 2012)except for $80,000 charged to the General Fund. 3.Accrued year-end adjustments at June 30, 2012 for interest expense and depreciation.The useful life of the equipment is 5 years with no salvage value.

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.

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.

What basis of accounting is used by proprietary funds?

Interest payments on loans outstanding that do not relate to acquiring, constructing or improving capital assets are classified as ________ on the cash flow statement for an Enterprise Fund.