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Chapter 14 Homework. E 14-4. On the facing page are four accounts from a governmental fund balance sheet . Discuss how and why these accounts will be adjusted when preparing the balance sheet conversion worksheet for governmental activities . If no adjustments are required, state why. - PowerPoint PPT Presentation
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On the facing page are four accounts from a governmental fund balance sheet.Discuss how and why these accounts will be adjusted when preparing the balancesheet conversion worksheet for governmental activities. If no adjustments are required, state why.
Due from International Airport Enterprise Fund.... $50,000Due to Water Enterprise Fund............................................... 20,000Due to GF............................................................................... 10,000Due from SRF..........................................................................10,000
receivablepayable
payable
receivable
Gov Activities Bus Type Activities
due from airportenterprise fund$50,000
due to governmentalfund; $50,000
INTERNAL BALANCE
In Gov Activities column
internal balance...$50,000due from airport enterprise fund...$50,000
On the facing page are four accounts from a governmental fund balance sheet.Discuss how and why these accounts will be adjusted when preparing the balancesheet conversion worksheet for governmental activities. If no adjustments are required, state why.
Due from International Airport Enterprise Fund.... $50,000Due to Water Enterprise Fund............................................... 20,000Due to GF............................................................................... 10,000Due from SRF..........................................................................10,000
payable
payable
receivable
Gov Activities Bus Type Activities
due to waterenterprise fund$20,000
due from govfund $20,000
INTERNAL BALANCE
In Gov Activities column
due to enterprise fund $20,000Internal balance......$20,000
On the facing page are four accounts from a governmental fund balance sheet.Discuss how and why these accounts will be adjusted when preparing the balancesheet conversion worksheet for governmental activities. If no adjustments are required, state why.
Due from International Airport Enterprise Fund.... $50,000Due to Water Enterprise Fund............................................... 20,000Due to GF............................................................................... 10,000Due from SRF..........................................................................10,000
payable
receivable
Gov Activities Bus Type Activities
due to GF$10,000 (in SRF)
due fromthe SRF$10,000 (in GF)
ELIMINATION
In Gov Activities column
due to GF....$10,000due from SRF.....$10,000
The following information is for the governmental funds (total) of Bell Countyfor 20x6. Assume the deferred tax revenues meet the earnings criteria.
Deferred Tax Revenues (January 1)................... $800,000
Deferred Tax Revenues (December 31)............. $1,300,000
Tax Revenues (20x6)......................................... $8,000,000
a. Prepare the worksheet conversion entries required for thisinformation using the one-worksheet approach in Appendix 14-1.
The following information is for the governmental funds (total) of Bell Countyfor 20x6. Assume the deferred tax revenues meet the earnings criteria.
Deferred Tax Revenues (January 1)................... $800,000
Deferred Tax Revenues (December 31)............. $1,300,000
Tax Revenues (20x6)......................................... $8,000,000
a. Prepare the worksheet entry to derive the tax revenues to be reportedfor governmental activities in the government-wide financial statements.
Deferred Tax Revenue.................. $800,000
Net Assets.......................................$800,000
Reestablishes revenues from previous periods that should be countedas revenue in Government-Wide.
The following information is for the governmental funds (total) of Bell Countyfor 20x6. Assume the deferred tax revenues meet the earnings criteria.
Deferred Tax Revenues (January 1)................... $800,000
Deferred Tax Revenues (December 31)............. $1,300,000
Tax Revenues (20x6)......................................... $8,000,000
a. Prepare the worksheet entry to derive the tax revenues to be reportedfor governmental activities in the government-wide financial statements.
Deferred Tax Revenue.................. $500,000
Revenue.....................................$500,000
Takes this year’s deferred tax revenue and says its actually earnedrevenue for GOVT-WIDE statements.
$1,300,000 - $800,000 = $500,000 increase this year
The following information is for the governmental funds (total) of Bell Countyfor 20x6. Assume the deferred tax revenues meet the earnings criteria.
Deferred Tax Revenues (January 1)................... $800,000
Deferred Tax Revenues (December 31)............. $1,300,000
Tax Revenues (20x6)......................................... $8,000,000
b. Compute the governmental activities tax revenues to be reported in
Bell County’s government-wide Statement of Activities for 20x6.
Tax revenues 20x6....................................... $8,000,000+ incremental adjustment for x6.................. 500,000-----------------------------------------------------------------------------------TOTAL $8,500,000
Mosser Township’s expenditures for claims and judgments for all its governmentalfunds totaled $5,300,000 for 20X8. Mosser’s long-term liability for general governmentclaims and judgments was $12,000,000 at January 1, 2008 and $11,500,000 at December 31, 2008. Explain the worksheet adjustment to convert Mosser’s governmentalfunds claims and judgments expenditures to government-wide, governmentalactivities data. What are the total GOVT-WIDE claims and judgments expensesfor GOVTL activities?
Entries that Mosser DID
To record $5.3M of expenditures
C&A expenditures….$5.3MCash…………….$5.3M
To record decrease of $500,000 (12m-11.5m)of long-term liability for C&A
IN GLTL:
Long-term liability….$500,000Net Assets………$500,000
assume that $500K actual payment is partof $5.3M above.
Entry Mosser would have done in fullaccrual
C&A expense….$4.8MC&A liab…….. .5M
Cash…………..$5.3M
WORKSHEET ADJUSTMENT
C&A LIAB…..$.5MC&A EXPENSES…..$.5M
Expenditures incurred in 20X8 $5,300,000Reduction in long-term liabilities (500,000)
Government-wide expenses $4,800,000
What are the total GOVT-WIDE claims and judgments expenses for GOVTL activities?
Conversion of Enterprise Funds Data to Business-Type Activities Information. Presentedbelow is the PRECLOSING TRIAL BALANCE information for the total of LocklearCounty’s FOUR ENTERPRISE FUNDS.
Dr. Cr.Cash…………………………… $ 1,800,000A/R……………………………… 8,100,000Allowance for Uncollectible Accts $ 100,000Due from Other Enterprise Funds 600,000Inventory……………………………. 3,000,000Land…………………………………. 2,000,000Buildings…………………………… 10,000,000Acc Dep-Buildings……………….. 4,500,000Equipment…………………………. 27,000,000Acc Dep-Equipment……………… 18,000,000
Vouchers Payable………………… 3,600,000Due to GF………………………….. 550,000Due to Other Enterprise Funds… 600,000Deferred Grant Revenues………. 2,000,000Bonds Payable…………………….. 6,000,000Discount on B/P……………………. 200,000
Dr. Cr.Cash…………………………… $ 1,800,000A/R……………………………… 8,100,000Allowance for Uncollectible Accts $ 100,000Due from Other Enterprise Funds 600,000Inventory……………………………. 3,000,000Land…………………………………. 2,000,000Buildings…………………………… 10,000,000Acc Dep-Buildings……………….. 4,500,000Equipment…………………………. 27,000,000Acc Dep-Equipment……………… 18,000,000
Vouchers Payable………………… 3,600,000Due to GF………………………….. 550,000Due to Other Enterprise Funds… 600,000Deferred Grant Revenues………. 2,000,000Bonds Payable…………………….. 6,000,000Discount on B/P……………………. 200,000
Net Assets………………………….. 14,070,000Charges for Services: Water & Sewer……………………. 8,000,000 Golf Course……………………….. 1,000,000 Transit……………………………… 1,500,000 Convention Center………………. 4,000,000
Dr. Cr.Transfers from GF……… $ 3,700,000Investment Income……… 100,000Gain on sale of equipment… 50,000Contributions (of cap assets) from Govt’l unit………………… 830,000Water & Sewer expenses $7,200,000Golf Course Expenses 1,100,000Transit Authority Expenses 2,600,000Convention Center Expenses 5,000,000
--------------- ----------------Totals $68,600,000 $68,600,000
========== ==========
Additional Information:
1. The Contribution from Locklear County resulted from GCA being reassignedfor use in Enterprise Fund departments.
2. Expenses of the Golf Course, Transit Authority, and ConventionCenter Enterprise Funds included charges for water and sewer servicesof $25,000, $2,000, and $8,000 respectively.
Part A.
Discuss the adjustments that are necessary to convert this information tothe data to be used for the business-type activities in preparing thegovernment-wide financial statements.
1. The Contribution from Locklear County resulted from generalcapital assets being reassigned for use of Enterprise Fund departments.
Contributions from Govt’l Unit….. $830,000Transfers from Governmental Activities………..$830,000
cancels the contribution which is listedin trial balance as a credit.
reclassifies it as a “transfer” in the operatingstatement.
The due from other enterprise funds and due to other enterprise fundsaccounts should be ELIMINATED.
Due to Other Enteprise Funds…$600KDue from Other Enterprise Funds..$600K
The due to GF should be reclassified as an INTERNAL BALANCE.
Due to the GF............. $550,000Internal Balance..................$550,000
Part B.
Prepare the business-type activities column for the government-widestatement of net assets
and the business-type activities columns and rows of the Statement of Activities.
Locklear CountyStatement of Net AssetsSeptember 30, 20X7
Business-typeActivities
Assets
Current Assets:
Cash............................................ $1,800,000A/R (net)..................................... 8,000,000Inventory..................................... 3,000,000
-------------------Total CA $12,800,000
Noncurrent assets
Land................................. $2,000,000Buildings................................. 10,000,000Equipment................................. 27,000,000-Acc Dep.................................... (22,500,000)
Total NCA...............16,500,000
Total Assets $29,300,000
Liabilities
Current liabilities:
Vouchers/p..................................... $3,600,000Internal balance............................. 550,000Deferred Grant Revenues.............. 2,000,000
Total current liabilities....... 6,150,000
I had this as a negative asset in my lecture. OK either way.
Liabilities
Current liabilities:
Vouchers/p..................................... $3,600,000Internal balance............................. 550,000Deferred Grant Revenues.............. 2,000,000
Total current liabilities....... 6,150,000
Noncurrent liabilitiesBonds payable........................ $6,000,000Less Discount.......................... (200,000)
Total NCL................. 5,800,000Total Liabilities......... 11,950,000
Net Assets
Invested in capital assets net of relateddebt............................. $10,700,000
Unrestricted........................... $6,650,000 (plug)
Total net assets................ $17,350,000
Total NCA$16,500,000(net of acc/dep)-Bonds/p(net ofdisc).......$5,800,000------------------
Locklear CountyStatement of ActivitiesFor the Year Ended September 30, 20X7
Expenses Charges for Bus TypeServices Activities
Program Rev Net (Expense) Rev
Water & Sewer $7,200,000(given)
$8,000,000 $ 800,000(given)
Jacobs RidgeGolf Course 1,100,000
(given)$1,000,000 (100,000)(given)
Transit Authority $2,600,000(given)
$1,500,000 (1,100,000)(given)
Hardin-EmanuelConvention Center $5,000,000
(given)$4,000,000 (1,000,000)(given)
Totals $15,900,000 $14,500,000 (1,400,000)
Locklear CountyStatement of ActivitiesFor the Year Ended September 30, 20X7
Expenses Charges for Bus TypeServices Activities
Program Rev Net (Expense) Rev
Water & Sewer $7,200,000(given)
$8,000,000 $ 800,000(given)Jacobs Ridge
Golf Course 1,100,000(given) $1,000,000 (100,000)
(given)
Transit Authority $2,600,000(given)
$1,500,000 (1,100,000)(given)
Hardin-EmanuelConvention Center $5,000,000
(given)$4,000,000 (1,000,000)(given)
Totals $15,900,000 $14,500,000 (1,400,000)
General Revenues:
Investment income........................................... $100,000Gain on sale of equipment............................. 50,000
Transfers from Govtl activities................. 4,530,0003,700,000+830,000 Total Gen rev & transfers................................ 4,680,000
Change in NA..................................................... 3,280,000Net Assets 10/1/X6............................................ 14,070,000Net assets 9/30/X7........................................... 17,350,000
The December 31, 20X7 total fund balance (postclosing)was $6,764,000. Prepare a balance sheet conversionworksheet to derive government-wide, governmentalactivities data for Soucy Township.
ENTER THE PRECLOSING TRIAL BALANCE INFORMATION FOR Soucy TownshipGOVERNMENTAL FUNDS INTO THE WORKSHEET.
BALANCES AT $16,098,000 ==========
ENTER IN THE GCA AND GLTL INFORMATION DIRECTLY BELOW THEPRE-CLOSING TRIAL BALANCE INFORMATION.
BALANCES AT $27,898,000 ==========
Reclassify capital outlay expenditures as capital assets
Equipment………. $750,000Capital outlay-Equipment purchase….$750,000
ADJUSTMENT #1
Eliminate GCA sale proceeds and record a gain onthe capital asset sale
We don’t have this in this problem.
Piece of info. 6: Depreciation expense on the buildings and on the equipmentis associated with functions as follows:General Government 10%, Public Safety 50%, Highways & Streets25%, Health and Sanitation 10%, and Other 5%. Assumea zero salvage value.
Record Depreciation
Buildings: $3,500,000/20 (given) = $175,000 depreciation expense for year.
Equipment: $8,750,000/10 (given) = $875,000 [adds in $750,000 from prev. adj.]
Piece of info. 5: Depreciation expense on the buildings and on the equipmentis associated with functions as follows:General Government 10%, Public Safety 50%, Highways & Streets25%, Health and Sanitation 10%, and Other 5%. Assumea zero salvage value.
Buildings depreciation
Gen Gov expenditure.. $17,500 (10%)Public Saf expenditure.. 87,500 (50%)Highways & Streets…. 43,750 (25%)Health & San expend… 17,500 (10%)Other expenditure…. 8,750 (5%)
Accumulated Depreciation…… $175,000
Equipment depreciation
Gen Gov expenditure.. $87,500 (10%)Public Saf expenditure.. 437,500 (50%)Highways & Streets…. 218,750 (25%)Health & San expend… 87,500 (10%)Other expenditure…. 43,750 (5%)
Accumulated Depreciation…… $875,000
health & sanitation & other expendituresare recorded together on worksheetprintout.
adjustment #2
Reclassify bond proceeds and bond issue costs
doesn’t apply to this problem
Eliminate GLTL retirement expenditures and reduce liability
PCTB shows Principal Retirement of $100,000
Bonds payable………… $100,000Principal retirement………..$100,000
properly records the payment of principal as a reductionof a liability
adjustment #3
Record bond premium amortization
not in this problem
Record bond issue cost amortization
not in this problem
Record accrued interest and adjust beginningnet assets and interest expense.
Piece of info. 4: Accrued interest payable at 1/1/07 was $50,000; at December 31,it was $47,500.
Net Assets……..$50,000Accrued interest payable….$50,000
50K – 47,500 = 2,500 payment onaccount.
Accrued int pay…$2,500Interest expenditure 2.5K(fund accounting would havecalled this an expenditure).
adjustment #4
Net credit to accrued interest payable......$47,500
Adjust claim/adjustments expenses fordecreases in long-term liability for C&J.
not in this problem
Adjust compensated absences expenses for increasein long-term liability for compensated absences
not in this problem
Eliminate deferred tax revenues.
Piece of info. #1: Deferred Revenues (other than for grants) at thebeginning of the year were $2,200,000-all associated with taxes.
Deferred Revenues……….$2,200,000Net Assets……………………$2,200,000
By the EOY the deferred revenue is DOWN to $2,000,000.
Def Rev
2M EOY2.2M
.2MDEBITbalwe don’t wantany
.2Msecondadjust.
0
Revenue……………$200,000Deferred Revenue………$200,000
That must mean that some of the current tax revenue being counted as revenueis actually just a receipt of last year’s revenue which is already recognized as NA
adjustment #5
Eliminate interfund payables and receivablesbetween governmental funds.
Due to GF…….. $75,000Due from SRF……… $75,000
adjustment #6
Eliminate transfers between governmentalfunds.
Transfers from GF……… $111,000Transfers to CPF……….. $35,000Transfers to DSF……….. $76,000
adjustment #7
Fund balance...... $8,124,000Net assets......$8,124,000
Reclassify beginning fund balance as netassets.
adjustment #10
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