19 Fischer10e SM Ch16 Final

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CHAPTER 16
UNDERSTANDING THE ISSUES
1. Capital projects funds are used to account for can be used to finance government programs,
the inflows and outflows of financial resources then a special revenue fund is used. If only the
raised and expended to acquire major capital earnings can be spent, a permanent fund is
assets used by the general government. This used.
accounting is in accordance with the flows of fi-
7. Two major types of interfund transfers are op-
nancial resources measurement focus adopted
erating transfers and equity transfers. Operat-
for governmental funds. Fixed assets acquired
ing transfers are of a frequent and recurring
with proceeds from general obligation bonds
nature and record billings for goods or services
are accounted for in the general fixed assets
provided, or transfers between funds for such
account group subsequent to acquisition.
items as debt servicing, financing of specific
2. Closing of a capital projects fund at the end of a programs, or funding of major construction
period is desirable to adjust and balance the projects. Equity transfers are infrequent and of-
fund accounts for the annual preparation of the ten nonrecurring. These transfers are often in
financial statements. As part of this process, conjunction with the initiating or closing of a
the fund balance, unreserved, undesignated is fund. Operating or equity transfers between go-
determined. This amount is the balance availa- vernmental funds use other financing sources
ble for completion of the project. Also, the total and other financing uses accounts. Operating
amount of expenditures on a project is deter- transfers between proprietary funds and go-
mined, which is recorded in the general fixed vernmental funds or between two proprietary
assets account group as the cost of a com- funds are recorded as revenues and expendi-
pleted asset or as Construction in Progress. tures/expenses. Equity transfers between go-
vernmental funds and proprietary funds are
3. Capital special assessments are levied in in-
recorded as interfund transfers (in proprietary
stallments to provide more time over which to
funds) and other financing sources or uses (in
spread collections. Only the portion available in
governmental funds).
the current period is recognized as revenue.
Recognition of revenue must be deferred for 8. Both an agency fund and a trust fund are fidu-
those installments to be collected in future pe- ciary funds. An agency fund is adopted when
riods. the fiduciary responsibility is short term and all
funds received are expendable. A trust fund is
4. The due date and amounts of principal and in-
used when the fiduciary responsibility is of a
terest payments are known. No useful data
longer duration.
would be produced by using budgetary
accounts. 9. Both are proprietary funds. An enterprise fund
is used to account for activities of a government
5. Revenues would be credited if resources were
that provides goods or services to the public.
received from a source outside of the govern-
An internal service fund is used to account for
mental unit that need not be repaid. An exam-
activities providing goods or services to other
ple is a property tax levy. If repayment is
departments within the same governmental
required, as in the case of a bond issue, the
unit.
credit is to Other Financing Sources. The latter
account is also used for amounts received from 10. Expenses are the expiration of economic re-
other funds of the same governmental unit if sources. Expenditures are the expiration of
that unit had previously recorded the resources financial resources. Proprietary funds record
as revenue. The procedure prevents recogniz- expenses using accrual accounting. Govern-
ing the same resources twice as revenue. mental funds record expenditures using mod-
ified accrual accounting.
6. Both funds account for public-purpose trusts. If
the resources and any earnings on investments
681
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11. The accounting emphasis for governmental accrual basis of accounting. They account for
funds emphasizes the funds available, spenda- their own assets (including fixed assets and
ble resources, and their expenditures. Modified depreciation) and liabilities (including long-term
accrual accounting is required. The debt). Proprietary funds also differentiate be-
accounting for proprietary funds, however, em- tween contributed and earned equity, just as a
phasizes expenses rather than expenditures corporation would.
and is similar to that for a private enterprise.
12. Private-purpose trust funds are used to account
Proprietary funds measure net income, focus-
for assets held by the government on behalf of
ing on the total cost of services and the
an individual, group, or organization. Perma-
amounts of cost recovered by revenue. Proprie-
nent funds record assets held, income from
tary funds are accounted for with a capital
which will benefit the government activities.
maintenance measurement focus, using the
682
Ch. 16Exercises
EXERCISES
EXERCISE 16-1
(1) a The cash flow statement for governmental proprietary funds and nonexpendable trust funds
has four parts. Cash from operations, cash from capital financing activities, cash from non-
capital financing activities, and cash from investing activities.
(2) a The general fund uses modified accrual. Enterprise funds recognize revenue when earned
under full accrual accounts.
(3) b Accounting procedures of internal service funds resemble commercial accounting. Thus, all
costs for operating the fund as well as asset replacement and expansion should be covered.
(4) d Payments for services provided by an internal service fund within the same governmental enti-
ty are considered quasi-external transactions. Therefore, they are recognized as operating
revenues.
(5) c As an interest adjustment factor, the premium should be transferred to the debt service fund
that pays the interest.
(6) c Item A is debt service, B is in the trust fund, and D is within the proprietary fund.
(7) a The entry for reinstatement is:

Encumbrances .................................................................. XXX
Fund BalanceUnreserved, Undesignated ................ XXX
(8) b This is one of two reclassification entries:

Deferred Revenues ........................................................... XXX
Revenues .................................................................... XXX
(9) a Governmental funds do not report cash flows since the amounts reported using modified ac-
crual are near cost.
(10) c The revenue is recorded by the general fund, but the debt service fund makes the payment of
principal and interest.
EXERCISE 16-2
(1) d The debt service fund follows general fund procedures except for the usual practice of not us-
ing budgetary entries.
(2) a Permanent funds are used to account for public-purpose trusts, for which earnings are ex-
pendable for a specific purpose. Permanent funds are classified as governmental funds.
(3) a Permanent funds are classified as governmental and follow accounting rules similar to general
funds.
683
Ch. 16Exercises
Exercise 16-2, Concluded
(4) d Capital projects funds are used to account for major construction activity financed by general
tax revenues or special assessments.
(5) a An investment trust fund is used to account for assets, liabilities, net assets, and changes in
net assets of external participants in an investment pool managed by the government.
(6) a Debt service funds are used to account for the payment of interest and principal on general
government long-term debt, not short-term debt or the debt of proprietary funds.
(7) b The agency fund internally distributes monies to recipient funds.
(8) b With no commitment by the governmental unit, the liability is solely that of the assessed prop-
erty owners. However, the amount of the bond liability may be shown in the notes to the finan-
cial statements.
(9) d This is the typical entry to record a years capitalizable costs of an unfinished capital project.
(10) c The amount to be provided is reduced with the receipt of available funds in the debt service
fund.
EXERCISE 16-3
(1) a Interest is recorded only in the period that interest is due.
(2) b The capital projects fund receives the proceeds and records the applicable expenditures.
(3) c All long-term debt that is the responsibility of the city (except debt of proprietary funds) is rec-
orded here.
(4) d Expenditures are closed at year-end in the capital projects fund. The amount spent to date is
recorded in an in-progress account in the general fixed assets account group.
684
Ch. 16Exercises
EXERCISE 16-4
Fund or
Account Group Entries Debit Credit
(a) Capital Estimated Other Financing Sources ............................... 36,000,000
Projects Appropriations ............................................................ 14,000,000
Fund Budgetary Fund Balance ........................................... 22,000,000
To record budgeted amounts for city hall
construction project.
General The general fund budgetary entry would include
Fund $6,000,000 in Estimated Other Financing Uses.
(b) General Other Financing Uses ..................................................... 6,000,000

Fund Cash ........................................................................... 6,000,000
To record contribution to capital projects fund.
Capital Cash ............................................................................... 6,000,000
Projects Other Financing Sources ........................................... 6,000,000
Fund To record contribution from the general fund.
(c) Capital Cash ............................................................................... 29,700,000

Projects Expenditures .................................................................. 50,000
Fund Other Financing Uses ..................................................... 250,000
Other Financing Sources ........................................... 30,000,000
To record proceeds from the sale of bonds.
General Amount to Be Provided for Payment of Serial Bonds ..... 30,000,000
Long-Term Serial Bonds Payable ................................................. 30,000,000
Debt To record liability for the serial bonds.
(d) Capital Encumbrances ............................................................... 35,500,000

Projects Fund BalanceReserved for Encumbrances ............ 35,500,000
Fund To record signing of construction contract.
(e) Capital Fund BalanceReserved for Encumbrances ................ 10,000,000

Projects Encumbrances ........................................................... 10,000,000
Fund To record liquidation of encumbrances.
Expenditures .................................................................. 10,000,000
Cash ........................................................................... 10,000,000
To record expenditures for partial completion.
General Construction in Progress ................................................ 10,000,000
Fixed Assets Investment in General Fixed Assets
Account Capital Projects Fund(s) ........................................ 10,000,000
Group To record partial completion of city hall project.
685
Ch. 16Exercises
EXERCISE 16-5
Cash ...................................................................................................... 40,000

Other Financing Sources ................................................................. 40,000
To record cash receipt from the general fund.
Cash ...................................................................................................... 360,000
Other Financing Sources ................................................................. 360,000
To record bonds issued.
Encumbrances ....................................................................................... 400,000
Fund BalanceReserved for Encumbrances .................................. 400,000
To record purchase orders placed and signing of contract.
Fund BalanceReserved for Encumbrances........................................ 400,000
Encumbrances ................................................................................. 400,000
To reverse encumbrances.
Expenditures .......................................................................................... 399,000
Contracts Payable............................................................................ 325,000
Vouchers Payable* .......................................................................... 74,000
To record actual liabilities of project.
Contracts Payable ................................................................................. 325,000
Vouchers Payable* ................................................................................ 74,000
Contracts PayableRetained Percentage ...................................... 30,000
Cash................................................................................................. 369,000
To record payments and retained percentage.
*Vouchers payable could be used for the entire $399,000.
EXERCISE 16-6
Fund or
Account Group Date Entries Debit Credit
Debt Jan. 1 Special Assessments Receivable (current) ....... 90,000
Service Special Assessments Receivable (deferred) .... 270,000
Revenues ...................................................... 90,000
Deferred Revenues ....................................... 270,000
To record receivables from special
assessments.
June 30 Cash .................................................................. 63,000

Special Assessments Receivable (current) .. 45,000
Revenues (5% $360,000) .......................... 18,000
To record receipt of payment by owners.
Expenditures ..................................................... 63,000
Cash ............................................................. 63,000
To record payment of principal and
interest.
686
Ch. 16Exercises
Fund or
Account Group Date Entries Debit Credit
Debt Dec. 31 Cash .................................................................. 60,750
Service Special Assessments Receivable (current) .. 45,000
Revenues (5% $315,000) .......................... 15,750
To record receipt of payment by owners.
Expenditures ..................................................... 60,750
Cash ............................................................. 60,750
To record payment of principal and
interest.
General Jan. 1 Amount to Be Provided by Special

Long-Term Assessments ................................................ 360,000
Debt Special Assessment Serial Bonds
Payable ................................................ 360,000
June 30 Special Assessment Serial Bonds Payable ...... 45,000
and Amount to Be Provided by Special
Dec. 31 Assessments ............................................ 45,000
EXERCISE 16-7
(a) No entry is made in the debt service fund.
(b) Expenditures................................................................................... 800,000

Matured Bonds Payable ........................................................... 500,000
Matured Interest Payable (6% $5,000,000) ........................... 300,000
To record matured items.
(c) Cash ............................................................................................... 800,000

Other Financing Sources .......................................................... 800,000
To record receipt of cash from the general fund.
(d) Cash with Fiscal Agent ................................................................... 800,000

Cash ......................................................................................... 800,000
To record transfer to First Bank.
(e) Matured Bonds Payable ................................................................. 500,000

Matured Interest Payable ............................................................... 291,000
Cash with Fiscal Agent ............................................................. 791,000
To record payments by bank.
687
Ch. 16Exercises
EXERCISE 16-8
(a) Restricted AssetsCash for Construction ..................................... 300,000

Interfund Transfer from General Fund ...................................... 300,000
To record restricted amount received from the
general fund.
(b) Accounts Receivable ...................................................................... 220,000

Due from Other Funds .................................................................... 67,000
Operating Revenues (or Billings for Services) .......................... 287,000
To record billings.
(c) Cash ............................................................................................... 232,000

Due from Other Funds .............................................................. 42,000
Accounts Receivable ................................................................ 190,000
To record collections.
(d) Restricted AssetsRevenue Bond Development Cash ................. 700,000

Revenue Bonds Payable .......................................................... 700,000
To record bond issuance with restriction on proceeds.
(e) No entry. Enterprise funds do not use budgetary accounts

for encumbrances.
(f) Construction in Progress ................................................................ 360,000

Contracts Payable from Restricted Assets ............................... 360,000
To record liability for work to date.
(g) Contracts Payable from Restricted Assets ..................................... 300,000

Restricted AssetsRevenue Bond Development Cash ........... 300,000
To record issuance of check from restricted cash.
EXERCISE 16-9
Permanent Fund
Cash ...................................................................................................... 100,000
Revenues ......................................................................................... 100,000
To record gift to the city.
Investment in Bonds .............................................................................. 100,000

Cash................................................................................................. 100,000
To record the investment in bonds.
Cash ...................................................................................................... 7,500

Revenues ......................................................................................... 7,500
To record the interest on bonds.
688
Ch. 16Exercises
Unrealized Loss ..................................................................................... 600

Investment in Bonds ........................................................................ 600
To record fair value adjustment.
Other Financing Uses ............................................................................ 6,000

Cash................................................................................................. 6,000
To record transfer to special revenue fund.
Revenues ............................................................................................... 107,500

Other Financing Uses ...................................................................... 6,000
Unrealized Loss ............................................................................... 600
Fund Balance ................................................................................... 100,900
To record closing entry.
City of Larkin
Water Quality Improvement Permanent Funds
Balance Sheet
December 31, 20X8
Assets Total
Cash .................................................................................................................. $ 1,500
Investments ....................................................................................................... 99,400
Total assets.................................................................................................. $100,900
Fund Balance
Reserved for endowments ................................................................................. $100,900
EXERCISE 16-10
(1) b (6) g
(2) f (7) a
(3) d (8) d
(4) d (9) i
(5) b (10) h
689
Ch. 16Exercises
EXERCISE 16-11
(1) g (6) j
(2) k (7) d
(3) l (8) a
(4) l (9) f
(5) e (10) b
EXERCISE 16-12
(a) GF, GFAAG

(b) DSF, CPF, GLTDAG
(c) GF, DSF, GLTDAG
(d) DSF, GLTDAG
(e) CPF, GFAAG
(f) PF, SRF
(g) ENT, INT, GFAAG, PPT
(h) ENT
(i) CPF, DSF, GLTDAG, GFAAG
690
Ch. 16Problems
PROBLEMS
PROBLEM 16-1
(1) b The agency fund distributes the collections to the recipient funds.
(2) c The grant is for the construction of a fixed asset.
(3) b The capital projects fund records other financing sources and uses. The debt service fund
records other financing sources. The general long-term debt account group records the amount
available in the debt service fund for principal only. Because the premium is an adjustment to
the interest, no entry is made in the GLTDAG.
(4) a Enterprise funds record their own debt.
(5) d All self-sustaining activities are recorded in proprietary funds; in this case, both are enterprise
funds.
(6) a Services to other governmental units by an internal service fund are recorded as either reve-
nues or billings.
(7) d The general fund records only its transfer; the debt proceeds are recorded as other financing
sources in the capital projects fund.
(8) b The change in the fund balance is equal to (revenues plus other sources) minus (expenditures
and other uses).
PROBLEM 16-2
(1) d Only the property taxes are revenue of a governmental fund.
(2) c Expenditures for a debt service fund equal the amount of matured principal ($2,000,000) plus
matured interest ($900,000). Unpaid accrued interest is recognized as an expenditure only if
the payment date for such interest has passed.
(3) a Because transfers received from other funds are not revenue but are other financing sources,
only the interest of $600,000 qualifies as revenue.
(4) c The grant from the state is revenue to the capital projects fund. Bond proceeds and transfers
from other funds are other financing sources.
(5) a Under modified accrual, issue costs and debt insurance are recorded as expenditures.
(6) b The general fund would record an interfund transfer-out (other financing use).
691
Ch. 16Problems
Problem 16-2, Concluded
(7) d City streets and sidewalks are infrastructure fixed assets. A governmental unit must include
such assets in its financial statements. The city hall ($800,000) and the three fire stations
($1,000,000) must also be included in the general fixed assets account group.
(8) a Special revenue funds are established to account for restricted resources used for operating
activities such as repair of streets and educational and economic development programs. If re-
sources are for a major construction project, the proceeds will be accounted for in a capital
projects fund.
PROBLEM 16-3
(1) Arnold Township

Administration Center Capital Projects Fund
Journal Entries
For Period July 1, 20X8, to June 30, 20X9
20X8
July 1 Cash ..................................................................................... 250,000
Advance from General Fund ............................................ 250,000
To record loan received from general fund.
9 Expenditures ........................................................................ 200,000
Cash................................................................................. 200,000
To record unencumbered expenditures.
Dec. 1 Cash ..................................................................................... 6,060,000
Other Financing Sources ................................................. 6,000,000
Other Financing SourcesPremium ............................... 60,000
To record sale of bonds.
1 Other Financing Uses........................................................... 60,000
Cash................................................................................. 60,000
To transfer premium to debt service fund.
1 Due from State Government ................................................ 3,000,000
Revenues ......................................................................... 3,000,000
To record grant due from state.
692
Ch. 16Problems
Problem 16-3, Continued
20X9
Apr. 30 Encumbrances ..................................................................... 7,000,000
Fund BalanceReserved for Encumbrances.................. 7,000,000
To record encumbrance for contract.
May 9 Cash ..................................................................................... 1,000,000
Due from State Government ............................................ 1,000,000
To record receipt of grant.
June 10 Advance from General Fund ................................................ 250,000
Cash................................................................................. 250,000
To record payment of loan.
30 Fund BalanceReserved for Encumbrances ...................... 1,200,000
Encumbrances ................................................................. 1,200,000
To reverse encumbrance for progress billing on
contract.
30 Expenditures ........................................................................ 1,200,000
Contracts Payable............................................................ 1,152,000
Contracts PayableRetained Percentage ...................... 48,000
To record expenditures on construction contract and
retained amount.
(2) Arnold Township

Closing Entries
June 30, 20X9
Revenues ....................................................................................... 3,000,000

Other Financing Sources ................................................................ 6,060,000
Expenditures ............................................................................. 1,400,000
Other Financing Uses ............................................................... 60,000
Fund BalanceUnreserved, Undesignated ............................. 7,600,000
Fund BalanceUnreserved, Undesignated ................................... 5,800,000

Encumbrances .......................................................................... 5,800,000
To close.
693
Ch. 16Problems
(3) Arnold Township

Balance Sheet
June 30, 20X9
Assets
Cash........................................................................................................................... $6,800,000
Due from state government ....................................................................................... 2,000,000
Total assets .......................................................................................................... $8,800,000
Liabilities and Fund Balance

Liabilities:
Contracts payable ...................................................................... $1,152,000
Contracts payableretained percentage................................... 48,000
Total liabilities ....................................................................... $1,200,000
Fund balance:
Reserved for encumbrances ...................................................... $5,800,000
Unreserved, undesignated ......................................................... 1,800,000
Total fund balance ................................................................ 7,600,000
Total liabilities and fund balance .................................... $8,800,000
(4) 20X8
July 1 General Advance to Capital Projects Fund ................... 250,000
Fund Cash ............................................................ 250,000
To record loan to the capital projects fund.
Dec. 1 Debt Cash ................................................................ 60,000

Service Other Financing Sources............................. 60,000
Fund To record receipt of premiums.
General Amount to Be Provided for Payment
Long-Term of Term Bonds ............................................. 6,000,000
Debt Bonds Payable ........................................ 6,000,000
Account To record bond liability.
Group
20X9
June 10 General Cash ................................................................ 250,000
Fund Advance to Capital Projects Fund ............... 250,000
To record repayment of loan.
30 General Construction in Progress ................................. 1,200,000

Account Capital Projects Fund.............................. 1,200,000
Group To record asset.
694
Ch. 16Problems
PROBLEM 16-4
(1) Appropriations ................................................................................ 640,000

Estimated Other Financing Uses .................................................... 25,000
Budgetary Fund BalanceUnreserved .......................................... 305,000
Estimated Revenues ................................................................ 20,000
Estimated Other Financing Sources ......................................... 950,000
Revenues ....................................................................................... 16,600
Other Financing Sources ................................................................ 900,000
Expenditures ............................................................................. 686,600
Other Financing Uses ............................................................... 15,000
Fund BalanceUnreserved, Undesignated ............................. 215,000
Fund BalanceUnreserved, Undesignated ................................... 80,000
Encumbrances .......................................................................... 80,000
(2) City of Craig

Capital Projects Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For Year Ended December 31, 20X9
Revenues ............................................................................................... $ 16,600
Expenditures .......................................................................................... 686,600
Excess of expenditures over revenues .................................................. $ (670,000)
Other financing sources ......................................................................... $900,000
Other financing uses .............................................................................. (15,000)
Excess of other financing sources over uses......................................... 885,000
Excess of revenues and other financing sources
over expenditures and other financing uses .................................... $ 215,000
Fund balances, January 2, 20X9 ........................................................... 0
Fund balances, December 31, 20X9 ..................................................... $ 215,000
695
Ch. 16Problems
(3) City of Craig

Capital Projects Fund
Balance Sheet
December 31, 20X9
Assets
Current:
Cash ........................................................................................... $ 75,000
Investments ................................................................................ 200,000
Total current assets .............................................................. $275,000
Liabilities and Fund Balances

Current:
Contracts payableretained percentage................................... $ 60,000
Fund balances:
Reserved for encumbrances ...................................................... $ 80,000
Unreserved, undesignated ......................................................... 135,000
Total fund balances .............................................................. 215,000
Total liabilities and fund balances .................................. $275,000
PROBLEM 16-5
(1) d (2) b (3) b (4) a
696
Ch. 16Problems
PROBLEM 16-6
Fund or
Date Account Group Entry
Jan. 2 Capital Budgetary Fund BalanceUnreserved ............ 223,400
Projects Appropriations............................................... 223,400
Fund To record budget.
5 Capital Encumbrances .................................................. 80,000

Projects Fund BalanceUnreserved, Undesignated . 80,000
Fund To reinstate reserve.
Encumbrances .................................................. 138,000
Fund BalanceReserved for
Encumbrances ......................................... 138,000
To record encumbrances.
Feb. 1 Debt Cash .................................................................. 237,600

Service Interest Receivable on Delinquent Special
Fund Assessments ................................................ 2,400
Revenues ................................................. 20,000
Special Assessments Receivable
Current ................................................. 220,000
To record collections and to bill interest.
General Amount Available to Debt Service Fund ........... 220,000
Long-Term Amount to Be Provided for Payment
Debt Account of Special Assessment Bonds .................. 220,000
Group
Delinquent..................................................... 30,000
Current ................................................. 30,000
To reclassify delinquent special
assessments.
28 Debt Expenditures ..................................................... 115,000

Service Cash ............................................................. 115,000
Fund To record matured principal
and interest.
General Capital Project Special Assessment Debt with
Long-Term Governmental Commitment .......................... 100,000
Debt Account Amount Available in the Debt Service
Group Fund for Payment of Special
Assessment Bonds .............................. 100,000
697
Ch. 16Problems
Fund or
Mar. 14 Debt Cash .................................................................. 32,650
Service Special Assessments Receivable
Fund Delinquent ................................................ 30,000
Interest Receivable on Delinquent
Special Assessments ............................... 2,400
Revenues ...................................................... 250
To record collection of delinquent
special assessments and interest.
General Amount Available to Debt Service Fund ....... 30,000

Long-Term Amount to Be Provided for Payment
Debt Account of Special Assessment Bonds ............... 30,000
Group
May 1 Capital Expenditures ..................................................... 220,000

Projects Contracts Payable ........................................ 209,000
Fund Contracts PayableRetained Percentage ... 11,000
To book additional expenditures on
completed contract.
Fund BalanceReserved for Encumbrances ... 218,000
Encumbrances .............................................. 218,000
To reverse encumbrances entry on
completed project.
General Improvements Other than Buildings .................. 896,000
Fixed Assets Construction in Progress .............................. 676,000
Account Investment in General Fixed Assets
Group Capital Projects Funds (Special
Assessments) ........................................... 220,000
To record completion of project:
Total cost........................................ $896,000
Cost for 20X8 ................................. 220,000
Work in progress 20X7 ................... $676,000
10 Capital Contracts Payable ............................................. 100,000

Projects Cash ............................................................. 100,000
Fund To record payment.
698
Ch. 16Problems
PROBLEM 16-7
(1) b, f
(2) b, e
(3) d, b
(4) a, c
PROBLEM 16-8
(1) Entries in the Internal Service Fund:

ExpensesClaims and Judgments................................................ 1,500,000
Cash ......................................................................................... 1,300,000
Claims and Judgments Liability ................................................ 200,000
To record losses incurred and claims paid.
Cash ............................................................................................... 2,000,000
RevenuesInsurance Premiums ............................................. 2,000,000
To record premium revenue from other departments.
(2) Entries in General Fund:
Expenditures................................................................................... 1,200,000
Cash ......................................................................................... 1,200,000
To record premium transferred to insurance internal
service fund.
Entries in Utility Enterprise Fund:
Expenses ........................................................................................ 800,000
Cash ......................................................................................... 800,000
To record premium transferred to insurance internal
service fund.
(3) If the county elects to use a general fund for its self-insurance activity, revenue can be recognized
from other funds up to the amount of actual losses incurred ($1,500,000) or 75% of the amount ac-
tually billed and transferred from other funds. The $500,000 excess of transfers over actual losses
must be reported as an interfund transfer. Similarly, the funds transferring the premium would be
limited to their share of actual losses in the recognition of expenditures/expenses.
PROBLEM 16-9
(1) General Fixed Assets Account Group (6) Private-Purpose Trust

(2) General Fixed Assets Account Group (7) Agency Fund
(3) General Long-Term Debt Account Group (8) Agency Fund
(4) Internal Service Fund (9) Permanent Fund
(5) General Long-Term Debt Account Group (10) Special Revenue Fund
699
Ch. 16Problems
PROBLEM 16-10
Fund or
Jan. 2 Capital Estimated Revenues ......................................... 350,000
Projects Estimated Other Financing Sources ................. 550,000
Fund Appropriations ($900,000 70%) ................. 630,000
Budgetary Fund BalanceUnreserved ........ 270,000
To record budget.
Estimated revenues:
Special assessments ............ 250,000
County grant ......................... 100,000
Other financing sources:
Bond proceeds...................... 500,000
General fund transfer ............ 50,000
2 Capital Due from County ............................................... 100,000
Projects Due from General Fund .................................... 50,000
Fund Revenues ...................................................... 100,000
Other Financing Sources .............................. 50,000
To record amounts receivable.
General Other Financing Uses ....................................... 50,000
Fund Due to Capital Projects Fund ........................ 50,000
To record required transfer.
5 Capital Special Assessments ReceivableCurrent ...... 250,000

Projects Revenues ...................................................... 250,000
Fund To record levy of assessments.
Debt Special Assessments ReceivableDeferred .... 500,000
Service Deferred RevenuesSpecial
Fund Assessments ............................................ 500,000
To record levy of assessments.
9 Capital Cash .................................................................. 150,000

Projects Due from County ........................................... 100,000
Fund Due from General Fund ................................ 50,000
To record amounts received.
General Due to Capital Projects Fund ............................ 50,000
Fund Cash ............................................................. 50,000
To record cash transfer.
10 Capital Encumbrances .................................................. 675,000

Projects Fund BalanceReserved for
Fund Encumbrances ......................................... 675,000
To record encumbrances.
700
Ch. 16Problems
Fund or
Feb. 1 Capital Cash .................................................................. 250,000
Projects Special Assessments ReceivableCurrent . 250,000
Fund To record collections.
Mar. 1 Capital Cash .................................................................. 505,000
Projects Other Financing Sources .............................. 500,000
Fund Other Financing SourcesPremium ............ 5,000
To record bond sale at premium.
Other Financing Uses ....................................... 5,000
Cash ............................................................. 5,000
To record premium to be transferred.
1 Debt Cash .................................................................. 5,000
Service Other Financing Sources .............................. 5,000
Fund To record premium due.
1 General Amount to Be Provided for Payment of Special
Long-Term Assessment Serial Bonds ............................. 500,000
Debt Account Special Assessment Bonds Payable ........ 500,000
Group To record commitment on guaranteed
bond issue.
1 Capital Investments ....................................................... 600,000
Projects Cash ............................................................. 600,000
Fund To record investment.
Aug. 31 Capital Other Financing Uses ....................................... 10,000

Projects Cash ............................................................. 10,000
Fund To record transfer for interest.
31 Debt Cash .................................................................. 10,000
Service Other Financing Sources .............................. 10,000
Fund To record cash transfer from capital
projects fund.
Sept. 1 Debt Expenditures ..................................................... 15,000

Service Cash ............................................................. 15,000
Fund To record interest payment.
Dec. 15 Capital Fund BalanceReserved for Encumbrances ... 595,000

Projects Encumbrances .............................................. 595,000
Fund To reverse encumbrances.
Expenditures ..................................................... 600,000
Contracts Payable ........................................ 540,000
Contracts PayableRetained Percentage ... 60,000
To record contractors invoice.
701
Ch. 16Problems
Fund or
Dec. 29 Capital Cash .................................................................. 416,600
Projects Investments .................................................. 400,000
Fund Revenues ...................................................... 16,600
To record partial liquidation of
investments.
30 Capital Contracts Payable ............................................. 540,000

Projects Cash ............................................................. 540,000
Fund To record payment to contractor.
Expenditures ..................................................... 76,600
Vouchers Payable ......................................... 76,600
To record vouchers.
Vouchers Payable ............................................. 76,600
Cash ............................................................. 76,600
To record voucher payment.
30 Debt Special Assessments ReceivableCurrent ...... 250,000
Service Special Assessments Receivable
Fund Deferred ................................................... 250,000
To reclassify receivables.
30 Debt Deferred RevenuesSpecial Assessments ..... 250,000

Service Revenues ...................................................... 250,000
Fund To reclassify deferred revenues from
special assessments.
30 General Construction in Progress ................................... 676,600
Account Capital Projects Funds (special
Group assessments) ........................................... 676,600
To capitalize expenditures to date.
PROBLEM 16-11
City of Danville Internal Service Fund

Statement of Cash Flows
Cash flows from operating activities:

Collections (for services) from other funds .................................................. $ 6,380
Wages and salaries paid .............................................................................. (3,470)
Purchase of supplies .................................................................................... (1,650)
Net cash provided by operating activities .................................................... $ 1,260
702
Ch. 16Problems
Cash flows from noncapital financing activities:

Loans from other funds ................................................................................ $ 600
Repayment of loans from other funds .......................................................... (880)
Net cash used for noncapital financing activities ......................................... $ (280)
Cash flows from capital and related financing activities:

Proceeds of revenue bonds ......................................................................... $ 800
Proceeds from sale of capital assets ........................................................... 23
Purchase of capital assets ........................................................................... (900)
Interest paid on long-term debt .................................................................... (150)
Net cash used for capital and related financing activities ............................ $ (227)
Cash flows from investing activities:

Proceeds from sale of investments .............................................................. $ 33
Interest from investments ............................................................................. 45
Purchase of investments .............................................................................. (440)
Net cash used for investing activities ........................................................... $ (362)
Net increase in cash .......................................................................................... $ 391

Cash on hand beginning of year .................................................................. 122
Cash on hand end of year............................................................................ $ 513
PROBLEM 16-12
(1) (a) Inventory of Materials and Supplies ......................................... 72,000

Vouchers Payable............................................................... 72,000
To record purchases on account.
(b) Operating Expenses ................................................................. 87,000

Inventory of Materials and Supplies.................................... 87,000
To record inventory adjustment
($80,000 + $72,000 $65,000).
(c) Operating Expenses ................................................................. 235,000

Cash ................................................................................... 235,000
To record salaries and wages paid.
(d) Operating Expenses ................................................................. 40,000

Cash ................................................................................... 40,000
To record payment of utility charge.
(e) Operating Expenses ................................................................. 139,500

Allowance for DepreciationBuilding ................................. 6,500
Allowance for DepreciationComputer Equipment ........... 133,000
To record depreciation.
703
Ch. 16Problems
(f) Due from General Fund ............................................................ 392,000

Due from Water and Sewer Fund ............................................. 84,000
Due from Special Revenue Fund ............................................. 42,000
Operating Revenues ........................................................... 518,000
To record billings.
(g) Cash ......................................................................................... 506,000

Due from General Fund
($140,000 + $392,000 $136,000) .............................. 396,000
Due from Water and Sewer Fund ....................................... 84,000
Due from Special Revenue Fund ($42,000 $16,000) ...... 26,000
(h) Vouchers Payable .................................................................... 94,000

Cash ................................................................................... 94,000
To record voucher payment
($41,000 + $72,000 $19,000).
(2) Closing Entries:

Operating Revenues ................................................................. 518,000
Operating Expenses
($87,000 + $235,000 + $40,000 + $139,500) ............... 501,500
Income Summary................................................................ 16,500
To close nominal accounts.
Income Summary ..................................................................... 16,500

Retained EarningsUnreserved ........................................ 16,500
To close Income Summary.
PROBLEM 16-13
(1) Landfill Expense ............................................................................. 500,000

Landfill Closure and Post-Closure Care Liability ........................ 500,000
To record (300,000 6,000,000) $10,000,000.
(2) Landfill Expense ............................................................................. 555,172
Landfill Closure and Post-Closure Care Liability ...................... 555,172
To record (300,000 + 300,000) 5,800,000
$10,200,000 less $500,000 already recognized.
(3) If the landfill is accounted for in the general fund, then the liability would be recognized in the gen-
eral long-term debt account group. No entries would be made in the general fund until actual pay-
ments are made.
704
Ch. 16Problems
PROBLEM 16-14
Redford Citys Employees Retirement System Fund

Statement of Plan Net Assets
As of June 30, 20X8
Assets
Cash and short-term investments .......................................................... $ 38,000
Receivables:
Employer .......................................................................................... $4,000
Interest and dividends ...................................................................... 5,000
Total receivables .............................................................................. 9,000
Investments, at fair value ....................................................................... 497,000
Total assets...................................................................................... $544,000
Liabilities
Refunds payable .................................................................................... $1,000
Annuities payable .................................................................................. 3,000
Total liabilities .................................................................................. $ 4,000
Net assets held in trust for pension benefits .......................................... $540,000
Redford Citys Employees Retirement System Fund

Statement of Changes in Plan Net Assets
For Year Ended June 30, 20X8
Additions
Contributions:
Employer ($16,000 + $4,000) .......................................................... $20,000
Plan members .................................................................................. 32,000
Total contributions ...................................................................... $ 52,000
Investment income:
Net appreciation (depreciation) in fair value .................................... $13,500
Interest and dividend income ($30,000 + $5,000)............................ 35,000
Net investment income .................................................................... 48,500
Total additions ............................................................................ $100,500
Deductions
Benefits ($13,000 + $3,000) .................................................................. $ 16,000
Refunds of contributions ($2,500 + $1,000) ........................................... 3,500
Administrative expense .......................................................................... 5,000
Total deductions............................................................................... 24,500
Net increase ........................................................................................... $ 76,000
Net assets held in trust for pension benefits:
July 1, 20X7 ..................................................................................... 464,000
June 30, 20X8 .................................................................................. $540,000
705
Ch. 16Problems
PROBLEM 16-15
Hayward County Hayward County Reed City Newbury Township

Accounts Tax Agency Fund General Fund General Fund General Fund
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Taxes ReceivableCurrent ............................... ............... ............... 3,600,000 ...... 1,800,000 600,000
Allowance for Uncollectible Taxes ................. ............... ............... ............... 100,000 ................ 60,000 ............ 40,000
Revenues ....................................................... ............... ............... ............... 3,500,000 ................ 1,740,000 ......
560,000
To record tax levy.
Revenues ............................................................ ............... ............... ............... ............... ................ ............... 10,000 ............
Taxes ReceivableCurrent........................... ............... ............... ............... ............... ................ ............... ............ 10,000
To correct tax levy error.
Taxes Receivable for Other Funds ..................... 5,990,000 ............... ............... ............... ................ ............... ............ ............
Due to Other Governmental Units ................. ............... 5,990,000 ............... ............... ................ ............... ............ ............
To record taxes to be collected.
Cash ................................................................... 1,440,000 ............... ............... ............... ................ ............... ............ ............
Taxes Receivable for Other Funds ................ ............... 1,440,000 ............... ............... ................ ............... ............ ............
To record tax collection.
Due to Other Governmental Units ...................... 1,440,000 ............... ............... ............... ................ ............... ............ ............
Cash............................................................... ............... 1,440,000 ............... ............... ................ ............... ............ ............
To record cash distribution.
Expenditures ....................................................... ............... ............... ............... ............... 8,640 ............. 2,880 ...
Cash ................................................................... ............... ............... 875,520* ........... 423,360* . 141,120*
Taxes ReceivableCurrent........................... ............... ............... ............... 864,000 ................ 432,000 ............ 144,000
Revenues ....................................................... ............... ............... ............... 11,520 ................ ............... ............ ............
To record cash received by general funds.
*Calculation of cash distribution:

Hayward County Reed City Newbury Township
General Fund General Fund General Fund
Cash collected .................................................. $1,440,000 $1,440,000 $1,440,000
Composite rate ................................................. 60% 30% 10%
$ 864,000 $ 432,000 $ 144,000
2% charge/earnings .......................................... 11,520 (8,640) (2,880)
Cash distribution ............................................... $ 875,520 $ 423,360 $ 141,120
706
Ch. 16Problems
PROBLEM 16-16
Fund or
Account Group Journal Entry
(1) General Estimated Revenues ................................................... 2,500,000
Fund Appropriations ......................................................... 2,450,000
Budgetary Fund BalanceUnreserved .................. 50,000
To record the budget.
(2) Special Estimated Revenues ................................................... 264,500

Revenue Appropriations ......................................................... 250,000
Fund Budgetary Fund BalanceUnreserved .................. 14,500
To record budget for gas tax.
(3) General Taxes ReceivableCurrent ........................................ 1,400,000

Fund Allowance for Uncollectible Current Taxes ............. 28,000
Revenues ................................................................ 1,372,000
To record tax levy.
(4) Capital Cash ............................................................................ 985,000

Expenditures................................................................ 5,000
Projects Other Financing Uses .................................................. 10,000
Fund Other Financing Sources ........................................ 1,000,000
To record bond sale.
General Amount to Be Provided for Payment
Debt of Term Bonds......................................................... 1,000,000
Account Term Bonds Payable .......................................... 1,000,000
Group To record long-term debt.
(5) Capital Encumbrances............................................................. 1,000,000

Projects Fund BalanceReserved for Encumbrances ......... 1,000,000
Fund To record signed contract.
707
Ch. 16Problems
Fund or
Account Group Journal Entry
(6) Capital Fund BalanceReserved for Encumbrances ............. 1,000,000
Projects Encumbrances ........................................................ 1,000,000
Fund To liquidate encumbrances.
Capital Expenditures................................................................ 990,000
Projects Cash ........................................................................ 990,000
Fund To record school cost.
General Buildings ...................................................................... 990,000
Account Capital Projects Fund ......................................... 990,000
Group To record fixed asset.
(7) General Other Financing Uses .................................................. 100,000

Fund Cash ........................................................................ 100,000
To record transfer to debt service fund.
Debt Cash ............................................................................ 100,000
Service Other Financing Sources ........................................ 100,000
Fund To record transfer from general fund.
(8) General Land............................................................................. 100,000

Account Donations ........................................................... 100,000
Group To record land donation.
(9) Special Cash ............................................................................ 205,000

Revenue Due from State Government........................................ 60,000
Fund Revenues ................................................................ 205,000
Deferred Revenues ................................................. 60,000
To record state gas taxes.
(10) Special Expenditures ................................................................ 210,000
Revenue Vouchers Payable ................................................... 210,000
Fund To record vouchers approved for payment.
708
Ch. 16Problems
PROBLEM 16-17
Dexter Village
Transactions for Fiscal Year Ended June 30, 20X9
Trans- Fund or
action Account Account Title Amount
No. Group and Explanation Debit Credit
(1) General Estimated Revenues ................................................ 400,000

Fund Appropriations ...................................................... 394,000
Budgetary Fund BalanceUnreserved ............... 6,000
To record budgetary fund balances.
(2) General Taxes ReceivableCurrent ..................................... 390,000

Fund Allowance for Uncollectible Current
Taxes ............................................................... 7,800
Revenues ............................................................. 382,200
To record tax levy.
(3a) Private- Investments .............................................................. 50,000

Purpose Fund Balance ....................................................... 50,000
Principal Fund To record the value of securities donated.
(3b) Private- Cash ......................................................................... 5,500

Purpose Revenues ............................................................. 5,500
Earnings Fund To record revenues earned.
(4a) General Other Financing Uses ............................................... 5,000

Fund Cash ..................................................................... 5,000
To record establishment of
intragovernmental fund.
(4b) Internal Cash ......................................................................... 5,000

Service Interfund Transfer Fee ......................................... 5,000
Fund To record contribution from general fund.
(5) Capital Estimated Other Financing Sources ......................... 3,000

Projects Estimated Revenues ................................................ 72,000
Fund Appropriations ...................................................... 75,000
(6a) Capital Due from General Fund ............................................ 3,000

Projects Special Assessments Receivable............................. 72,000
Fund Revenues ............................................................. 72,000
Other Financing Sources ..................................... 3,000
709
Ch. 16Problems
Trans- Fund or
(6b) Capital Cash ......................................................................... 75,000
Projects Special Assessments Receivable ........................ 72,000
Fund Due from General Fund ....................................... 3,000
(6c) General Other Financing Uses ............................................... 3,000

Fund Due to Capital Projects Fund ............................... 3,000
(6d) General Due to Capital Projects Fund ................................... 3,000

Fund Cash ..................................................................... 3,000
To record cash payment.
(7a) Capital Encumbrances.......................................................... 75,000

Projects Fund BalanceReserved for Encumbrances ...... 75,000
Fund To record contract for lighting.
(7b) Capital Fund BalanceReserved for Encumbrances .......... 75,000

Projects Encumbrances ..................................................... 75,000
Fund To reverse encumbrances.
Expenditures............................................................. 75,000
Cash ..................................................................... 71,250
Contracts PayableRetained Percentage .......... 3,750
(7c) General Improvements Other than Buildings ......................... 75,000

Fixed Assets Investments in General Fixed Assets
Account Capital Projects Fund ...................................... 75,000
Group To record improvements.
(8) Internal Inventory ................................................................... 1,900

Service Cash or Vouchers Payable .................................. 1,900
Fund To record purchase of supplies.
(9a) General Cash ......................................................................... 393,000

Fund Taxes ReceivableCurrent ................................. 386,000
Revenues ............................................................. 7,000
(9b) General Allowance for Uncollectible Current Taxes ............... 3,800

Fund Revenues ............................................................. 3,800
To correct tax revenues. $7,800 original
allowance ($390,000 $386,000).
710
Ch. 16Problems
Trans- Fund or
(10a) Capital Cash ......................................................................... 500,000
Projects Other Financing Sources ..................................... 500,000
Fund To record issuance of bonds.
(10b) General Amount to Be Provided for Payment

Long-Term of Bonds ............................................................... 500,000
Debt Account General Obligation Bonds Payable.................. 500,000
Group To record liability.
(11a) General Fund BalanceReserved for Encumbrances .......... 145,000

Fund Encumbrances ..................................................... 145,000
To record cancellation of encumbrances upon
payment for fire truck.
(11b) General Expenditures............................................................. 150,000

Fund Cash ..................................................................... 150,000
To record purchase of fire truck.
(11c) General Fire Truck ................................................................. 150,000

Account General Fund Revenues.................................. 150,000
Group To record acquisition.
PROBLEM 16-18
(1) $104,500 (6) $104,500

(2) $17,000 (7) $386,000 ($364,000 + $22,000)
(3) $125,000 ($42,000 + $83,000) (8) $100,000
(4) $236,000 (9) $181,000
(5) $6,000 (10) $190,000
711
Ch. 16Problems
PROBLEM 16-19
(1) N (9) Y (16) $5,600,000

(2) Y (10) N (17) $4,750,000
(3) Y (11) Y (18) $1,200,000
(4) N (12) N (19) $1,080,000
(5) N (13) N (20) $2,473,000 ($1,080,000 + $1,420,000 $27,000)
(6) N (14) N (21) $800,000
(7) N (15) Y (22) $2,422,000
(8) N (23) $120,000 ($1,420,000 $1,300,000)
PROBLEM 16-20
(1)
Trans- Fund or
(a) Capital Estimated Other Financing Sources ......................... 600,000
Projects Fund Appropriations ...................................................... 600,000
(b) Capital Expenditures............................................................. 150,000

Projects Fund Cash ..................................................................... 50,000
Vouchers Payable ................................................ 100,000
(c) Capital Cash ......................................................................... 459,000

Projects Fund Other Financing Sources ..................................... 459,000
Capital Other Financing Uses ............................................... 9,000
Debt Cash ......................................................................... 9,000
Service Fund Other Financing Sources ..................................... 9,000
General Amount to Be Provided in the Debt
Long-Term Service Fund ........................................................ 450,000
Debt Account Bonds Payable................................................. 450,000
Group
(d) Capital Vouchers Payable .................................................... 100,000

General Land ......................................................................... 150,000
Long-Term Investment in general fixed assets ....................... 150,000
Debt Account Group
712
Ch. 16Problems
Trans- Fund or
(e) Capital Encumbrances.......................................................... 400,000
Projects Fund Fund BalanceReserved for Encumbrances ...... 400,000
(f) Capital Fund BalanceReserved for Encumbrances .......... 200,000

Projects Fund Encumbrances ..................................................... 200,000
Capital Expenditures............................................................. 200,000
(g) General Other Financing Uses ............................................... 9,000

Fund Cash ..................................................................... 9,000
Debt Cash ......................................................................... 9,000
Service Fund Other Financing Sources ..................................... 9,000
Debt Expenditures............................................................. 18,000
Service Fund Cash ..................................................................... 18,000
(h) Capital Cash ......................................................................... 100,000

Projects Fund Other Financing Sources ..................................... 100,000
General Amount to Be Provided in the Debt
Long-Term Service Fund ........................................................ 100,000
Debt Account Bonds Payable................................................. 100,000
Group
(i) Capital Fund BalanceReserved for Encumbrances .......... 200,000

Projects Fund Encumbrances ..................................................... 200,000
Capital Expenditures............................................................. 210,000
(j) Capital Cash ......................................................................... 12,000

Projects Fund Revenues ............................................................. 12,000
(2) Closing and Adjusting Entries:

Fund or Account Title Amount
Account Group and Explanation Debit Credit
Capital Appropriations ................................................................ 600,000
Projects Fund Estimated Other Financing Sources .......................... 600,000
(Closing Revenues ....................................................................... 12,000

entries) Other Financing Sources ................................................ 559,000
Other Financing Uses ................................................ 9,000
Expenditures .............................................................. 560,000
Fund BalanceUnreserved, Designated .................. 2,000
713
Ch. 16Problems
Fund or Account Title Amount

Account Group and Explanation Debit Credit
(Transfer Interfund Transfers-Out .................................................. 2,000
residual equity Cash ........................................................................... 2,000
to debt Fund BalanceUnreserved, Designated ....................... 2,000
service fund.) Interfund Transfers-Out .............................................. 2,000
General Fixed Land ............................................................................... 150,000

Assets Account Building ........................................................................... 410,000
Group Investment in General Fixed Assets
(Capitalize total Capital Projects Fund ............................................ 560,000
expenditures
for land and
building.)
(3) City of Port Washington

Statement of Revenues, Expenditures,
and Changes in Fund Balance
For Year Ended December 31, 20X8
Library Construction Project
Revenues ..................................................................................................... $ 12,000

Expenditures ................................................................................................ 560,000
Excess (deficiency) of revenues over expenditures ............................... $(548,000)
Other financing sources (uses):
Bond proceeds ....................................................................................... $ 559,000
Operating transfers-out .......................................................................... 9,000
Total other financing sources (uses) ................................................ $ 550,000
Excess (deficiency) of revenues and other financing sources over
expenditures and other financing uses .................................................. $ 2,000
Interfund transfer to debt service fund ......................................................... (2,000)
Fund balanceJanuary 1, 20X8 ................................................................. 0
Fund balanceDecember 31, 20X8 ............................................................ $ 0
714

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UNDERSTANDING THE ISSUES

(7) a The entry for reinstatement is:

(8) b This is one of two reclassification entries:

Exercise 16-2, Concluded

(7) b The agency fund internally distributes monies to recipient funds.

(1) a Interest is recorded only in the period that interest is due.

(b) General Other Financing Uses ..................................................... 6,000,000

(c) Capital Cash ............................................................................... 29,700,000

(d) Capital Encumbrances ............................................................... 35,500,000

(e) Capital Fund BalanceReserved for Encumbrances ................ 10,000,000

Cash ...................................................................................................... 40,000

June 30 Cash .................................................................. 63,000

Exercise 16-6, Concluded

General Jan. 1 Amount to Be Provided by Special

(a) No entry is made in the debt service fund.

(b) Expenditures................................................................................... 800,000

(c) Cash ............................................................................................... 800,000

(d) Cash with Fiscal Agent ................................................................... 800,000

(e) Matured Bonds Payable ................................................................. 500,000

(a) Restricted AssetsCash for Construction ..................................... 300,000

(b) Accounts Receivable ...................................................................... 220,000

(c) Cash ............................................................................................... 232,000

(d) Restricted AssetsRevenue Bond Development Cash ................. 700,000

(e) No entry. Enterprise funds do not use budgetary accounts

(f) Construction in Progress ................................................................ 360,000

(g) Contracts Payable from Restricted Assets ..................................... 300,000

Investment in Bonds .............................................................................. 100,000

Cash ...................................................................................................... 7,500

Exercise 16-9, Concluded

Unrealized Loss ..................................................................................... 600

Other Financing Uses ............................................................................ 6,000

Revenues ............................................................................................... 107,500

(a) GF, GFAAG

(2) c The grant is for the construction of a fixed asset.

(4) a Enterprise funds record their own debt.

(1) d Only the property taxes are revenue of a governmental fund.

Problem 16-2, Concluded

(1) Arnold Township

Problem 16-3, Continued

(2) Arnold Township

Revenues ....................................................................................... 3,000,000

Fund BalanceUnreserved, Undesignated ................................... 5,800,000

Problem 16-3, Concluded

(3) Arnold Township

Liabilities and Fund Balance

Dec. 1 Debt Cash ................................................................ 60,000

30 General Construction in Progress ................................. 1,200,000

(1) Appropriations ................................................................................ 640,000

(2) City of Craig

Problem 16-4, Concluded

(3) City of Craig

Liabilities and Fund Balances

(1) d (2) b (3) b (4) a

5 Capital Encumbrances .................................................. 80,000

Feb. 1 Debt Cash .................................................................. 237,600

28 Debt Expenditures ..................................................... 115,000

Problem 16-6, Concluded

General Amount Available to Debt Service Fund ....... 30,000

May 1 Capital Expenditures ..................................................... 220,000

10 Capital Contracts Payable ............................................. 100,000

(1) Entries in the Internal Service Fund:

(1) General Fixed Assets Account Group (6) Private-Purpose Trust

5 Capital Special Assessments ReceivableCurrent ...... 250,000