8–C. Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and Statement of
Posted: Sat May 07, 2022 8:41 pm
8–C. Assemble the following from previous continuous problems:
(1) the governmental funds Balance Sheet and Statement of Revenues,
Expenditures, and Changes in Fund Balances from Section 5–C; (3)
the proprietary funds Statement of Net Position and Statement of
Revenues, Expenses, and Changes in Fund Net Position from Section
6–C. (Please right click on the attached document and select open
in new window. Then, download the template and enter the required
values in the appropriate fields. Save your completed template to
your computer and then upload it here by clicking "Browse." Next,
click "Save.")
Required:
1. Start a worksheet for adjustments, using the trial balance
format illustrated in the text (i.e. list accounts with debit
balances first, then accounts with credit balances). Enter the
balances from the governmental funds financial statements prepared
for Section 5-C. When doing this, follow the following
guidelines:
Net Position: Use a single account for net position (which will
include the beginning balance of all fund balance accounts).
Intergovernmental Revenues: When setting up the worksheet, set up
separate lines for the intergovernmental revenues as follows:
State Grant for Highway and Street Maintenance
$ 1,067,500
Operational Grant—General Government
332,000
Capital Grant—Public Safety
1,335,000
Total $ 2,734,500
Capital Assets: It is not necessary to set up separate lines for
different classes of capital (fixed) assets or accumulated
depreciation (simply use one row for Capital Assets and another for
Accumulated Depreciation).
Confirm that the total debits and credits equal.
2. Prepare worksheet entries and post to the worksheet for the
following items. Identify each adjustment by the letter used in the
problem:
Record the January 1, 2020 balances of general fixed asset and
related accumulated depreciation accounts. The City of Monroe had
the following balances (excluding Internal Service Funds):
Cost
Accumulated Depreciation
Totals $ 67,900,000
$
32,000,000
Eliminate the capital expenditures shown in the governmental funds
Statement of Revenues, Expenditures, and Changes in Fund
Balances.
Depreciation Expense (governmental activities) for the year totaled
$5,130,000.
Eliminate the other financing sources from the sale of bonds by
recording a liability for bonds payable and the related
premium.
As of January 1, 2020, the City of Monroe had $12,000,000 in
general obligation bonds outstanding.
Eliminate the expenditures for bond principal.
Accrue interest in the amount of $328,000. (Two bond issues were
outstanding; interest payments for both were last made on July 1,
2020. The computation is as follows: ($11,200,000 × 0.03 × 6/12) +
($4,000,000 × 0.08 × 6/12) = $328,000).
Adjust for the interest accrued in the prior year government-wide
statements, but recorded as an expenditure in the 2020 fund basis
statements, ($12,000,000 × 0.03 × 6/12) = $180,000.
Amortize bond premium in the amount of $10,000.
Make adjustments for additional revenue accrual. The only
adjustment is for property taxes to eliminate the current year
deferral of property taxes.
Adjust for the $21,000 of property taxes that was deferred in 2019
and recognized as revenue in the 2020 fund-basis statements.
Assume the City adopted a policy in 2020 of allowing employees to
accumulate compensated absences. Make an adjustment accruing the
expense of $42,000 Charge compensated absences expense.
Bring in the balances of the internal service fund balance sheet
accounts. Again, use a single account for all capital assets and a
second account for all accumulated depreciation balances (use a
separate column of the worksheet to enter Internal Service Fund
entries).
No revenues from internal service funds were with external parties.
Assume $3,200 of the $11,200 “Due from Other Funds” in the internal
service accounts represents a receivable from the General Fund and
the remaining $8,000 is due from the enterprise fund. Eliminate the
$3,200 interfund receivables.
Reduce governmental fund expenses by the net operating profit of
internal service funds. As the amount is small, reduce general
government expenses for the entire amount.
Eliminate transfers that are between departments reported within
governmental activities.
3. Prepare a Statement of Activities for the City of Monroe for the
Year Ended December 31, 2020. For purposes of this statement,
assume:
$332,000 in the General Fund is a state grant specifically to
support general government programs.
$1,067,500 in the Street and Highway Fund is an operating grant
specifically for highway and street maintenance expenses.
$1,335,000 in the City Jail Construction Fund is a capital grant
that applies to public safety.
Use the balances computed from the worksheet completed in part 2
for the governmental activities portion of the statement. Use the
solution to P6–C (Enterprise fund) to prepare the business
activities portion (net any short-term interfund
payables/receivables).
4. Prepare a Statement of Net Position for the City of Monroe as of
December 31, 2020. Group all capital assets, net of depreciation.
Include a breakdown in the Net Position section for (a) Capital
Assets, net of related debt, (b) Restricted, and (c) Unrestricted.
For purposes of classifying net position for the governmental
activities, assume:
For the governmental activities net position invested in capital
assets, net of related debt, the related debt includes the bonds
payable, the premium on bonds payable, and the advance from the
water utility fund.
The special revenue fund resources are restricted by the granting
agency for street and highway maintenance. Assume $204,500 are the
only restricted resources in the governmental activities.
5. Prepare the reconciliation necessary to convert from the fund
balance reported in the governmental funds Balance Sheet to the Net
Position in the government-wide Statement of Net Position.
6. Prepare the reconciliation necessary to convert from the change
in fund balances in the governmental funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the change in net
position in the government-wide Statement of Activities.
(1) the governmental funds Balance Sheet and Statement of Revenues,
Expenditures, and Changes in Fund Balances from Section 5–C; (3)
the proprietary funds Statement of Net Position and Statement of
Revenues, Expenses, and Changes in Fund Net Position from Section
6–C. (Please right click on the attached document and select open
in new window. Then, download the template and enter the required
values in the appropriate fields. Save your completed template to
your computer and then upload it here by clicking "Browse." Next,
click "Save.")
Required:
1. Start a worksheet for adjustments, using the trial balance
format illustrated in the text (i.e. list accounts with debit
balances first, then accounts with credit balances). Enter the
balances from the governmental funds financial statements prepared
for Section 5-C. When doing this, follow the following
guidelines:
Net Position: Use a single account for net position (which will
include the beginning balance of all fund balance accounts).
Intergovernmental Revenues: When setting up the worksheet, set up
separate lines for the intergovernmental revenues as follows:
State Grant for Highway and Street Maintenance
$ 1,067,500
Operational Grant—General Government
332,000
Capital Grant—Public Safety
1,335,000
Total $ 2,734,500
Capital Assets: It is not necessary to set up separate lines for
different classes of capital (fixed) assets or accumulated
depreciation (simply use one row for Capital Assets and another for
Accumulated Depreciation).
Confirm that the total debits and credits equal.
2. Prepare worksheet entries and post to the worksheet for the
following items. Identify each adjustment by the letter used in the
problem:
Record the January 1, 2020 balances of general fixed asset and
related accumulated depreciation accounts. The City of Monroe had
the following balances (excluding Internal Service Funds):
Cost
Accumulated Depreciation
Totals $ 67,900,000
$
32,000,000
Eliminate the capital expenditures shown in the governmental funds
Statement of Revenues, Expenditures, and Changes in Fund
Balances.
Depreciation Expense (governmental activities) for the year totaled
$5,130,000.
Eliminate the other financing sources from the sale of bonds by
recording a liability for bonds payable and the related
premium.
As of January 1, 2020, the City of Monroe had $12,000,000 in
general obligation bonds outstanding.
Eliminate the expenditures for bond principal.
Accrue interest in the amount of $328,000. (Two bond issues were
outstanding; interest payments for both were last made on July 1,
2020. The computation is as follows: ($11,200,000 × 0.03 × 6/12) +
($4,000,000 × 0.08 × 6/12) = $328,000).
Adjust for the interest accrued in the prior year government-wide
statements, but recorded as an expenditure in the 2020 fund basis
statements, ($12,000,000 × 0.03 × 6/12) = $180,000.
Amortize bond premium in the amount of $10,000.
Make adjustments for additional revenue accrual. The only
adjustment is for property taxes to eliminate the current year
deferral of property taxes.
Adjust for the $21,000 of property taxes that was deferred in 2019
and recognized as revenue in the 2020 fund-basis statements.
Assume the City adopted a policy in 2020 of allowing employees to
accumulate compensated absences. Make an adjustment accruing the
expense of $42,000 Charge compensated absences expense.
Bring in the balances of the internal service fund balance sheet
accounts. Again, use a single account for all capital assets and a
second account for all accumulated depreciation balances (use a
separate column of the worksheet to enter Internal Service Fund
entries).
No revenues from internal service funds were with external parties.
Assume $3,200 of the $11,200 “Due from Other Funds” in the internal
service accounts represents a receivable from the General Fund and
the remaining $8,000 is due from the enterprise fund. Eliminate the
$3,200 interfund receivables.
Reduce governmental fund expenses by the net operating profit of
internal service funds. As the amount is small, reduce general
government expenses for the entire amount.
Eliminate transfers that are between departments reported within
governmental activities.
3. Prepare a Statement of Activities for the City of Monroe for the
Year Ended December 31, 2020. For purposes of this statement,
assume:
$332,000 in the General Fund is a state grant specifically to
support general government programs.
$1,067,500 in the Street and Highway Fund is an operating grant
specifically for highway and street maintenance expenses.
$1,335,000 in the City Jail Construction Fund is a capital grant
that applies to public safety.
Use the balances computed from the worksheet completed in part 2
for the governmental activities portion of the statement. Use the
solution to P6–C (Enterprise fund) to prepare the business
activities portion (net any short-term interfund
payables/receivables).
4. Prepare a Statement of Net Position for the City of Monroe as of
December 31, 2020. Group all capital assets, net of depreciation.
Include a breakdown in the Net Position section for (a) Capital
Assets, net of related debt, (b) Restricted, and (c) Unrestricted.
For purposes of classifying net position for the governmental
activities, assume:
For the governmental activities net position invested in capital
assets, net of related debt, the related debt includes the bonds
payable, the premium on bonds payable, and the advance from the
water utility fund.
The special revenue fund resources are restricted by the granting
agency for street and highway maintenance. Assume $204,500 are the
only restricted resources in the governmental activities.
5. Prepare the reconciliation necessary to convert from the fund
balance reported in the governmental funds Balance Sheet to the Net
Position in the government-wide Statement of Net Position.
6. Prepare the reconciliation necessary to convert from the change
in fund balances in the governmental funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the change in net
position in the government-wide Statement of Activities.