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15 Jan 2018

On December 30, 2013, a county purchases a new snow plow for $100,000. On January 2, 2014, the snow plow is seriously damaged in an accident. The plow is uninsured. Soon after the accident, the county is able to sell the snow plow for $10,000.

a) Record the purchase of the snow plow in the county’s general fund.

b) Record the sale of the snow plow.

c) How would the sale of the snow plow affect the general fund’s operating statement?

d) How would the sale of the snow plow affect the governmental activities column of the government-wide statement of activities?

e) Explain the rationale for the difference between the information conveyed in the fund operating statement vs. the government-wide statement of activities in relation to the snow plow.

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Casey Durgan
Casey DurganLv2
16 Jan 2018

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In Fulbright County, the Parks and Recreation Departmentconstructed a library in one of the county’s high growth areas. Theconstruction was funded by a number of sources. Below is selectedinformation related to the Library Capital Project Fund. Allactivity related to the library construction occurred within the2017 fiscal year.

Required

Prepare a journal entry for capital projects fund andgovernmental activities at the government-wide level.(If no entryis required for a transaction/event, select "No Journal EntryRequired" in the first account field.)


1. The county issued $7,900,000, 6 percent bonds, with interestpayable semiannually on June 30 and December 31. The bonds solldfor 101 on july 30, 2016. Proceeds from the bonds were to be usedfor construction of the library, with all interest and premiumsreceived to be used to service the debt issue. Assume the premiumand interest are recorded directly in the debt service fund.

Capital Project fund:

Government Activities:

2. A $840,000 federal grant was receive to help financeconstruction of the library.

Required

Prepare a journal entry for capital projects fund andgovernmental activities at the government-wide level.(If no entryis required for a transaction/event, select "No Journal EntryRequired" in the first account field.)


1. The county issued $7,900,000, 6 percent bonds, with interestpayable semiannually on June 30 and December 31. The bonds solldfor 101 on july 30, 2016. Proceeds from the bonds were to be usedfor construction of the library, with all interest and premiumsreceived to be used to service the debt issue. Assume the premiumand interest are recorded directly in the debt service fund.

Capital Project fund:

Government Activities:

3. The library special revenue fund transferred $440,000 for usein construction of the library.

Capital Project fund:

Government Activities:

4. A construction contract was awarded in the amount of$6,990,000

Capital Project fund:

Government Activities:

5. The library was completed on June 1, 2017, four months aheadof schedule. Total construction expenditures for the libraryamounted to $9,160,500. When the project was completed, the cost ofthe library was allocated as follows. $295,000 to land, $6,390,000to building to building, and the remainder to equipment.

5a. Capital projects fund: Record the completion of constructionof the library

5b. Capital projects fund: Record the payment upon completion ofcapital project.

5c. Govermenatal activities: Record the completion ofconstruction of the library

5d Governmental activities: Record the capitalization of eachitem.

6. The capital projects fund temporary accounts were closed tofund balance-- restricted. The resources are restricted becausethey were obtained from bonded debt issued exclusively for libraryconstruction. The capital projects fund were closed by transferringremainin funds to the debt service fund for use in libraryconstruction debt repayment.

6a Capital Project fund: close the completion of construction ofthe library

6b Capital project fund: Record the transfer to the debt servicefund.

6c Capital project fund: Close the remaining temporary accountto Fund Balance- restricted.

6d. Governmental activities:

These are my options

No Journal Entry Required

Accumulated Depreciation

Appropriations

Bonds Payable

Budgetary Fund Balance

Buildings

Cash

Construction Expenditures

Construction Work in Progress

Encumbrances

Encumbrances Outstanding

Estimated Revenues

Expenditures

Expenses—General Government

Expenses—Public Safety

Fund Balance—Assigned

Fund Balance—Restricted

Fund Balance—Unassigned

Gain on Sale of Machinery

Interest Expenditures

Interest Payable

Interfund Transfers Out

Land

Loss on Sale of Machinery

Machinery and Equipment

Other Financing Sources—Interfund Transfers In

Other Financing Sources—Proceeds of Bonds

Other Financing Uses

Premium on Bonds Payable

Proceeds of Bonds

Program Revenues—Culture and Recreation—Capital Grants andContributions

Program Revenues—Public Safety

Revenues

Vouchers Payable

Acct 510 - MN CAFR Independent Assignment Page 1

Chapter 18 Lab => Government Accounting - MN Comprehensive Annual

Financial Report (CAFR)

Note: The MN CAFR is available online in the state of MN website (www.finance.state.mn.us).

NOTE: If you are not sure if you are interpreting a question correctly…just note your assumption.

Introduction Section

Transmittal Letter

1. What basis of accounting is this system maintained?

State Principal Officials

1. List the following:

a. Governor –

b. Attorney General –

c. State Auditor –

d. Chief Justice of the MN Supreme Court -

Financial Section

Management Discussion and Analysis (MD&A)

1. List the government wide financial statements.

2. List the three types of government activities broken down in the government wide financial

statements.

3. What type of activity would Metropolitan State University considered?

4. List the state’s top three component units.

5. The state’s funds are separated into three types of funds;

a. List the three fund types.

b. What fund is Metropolitan State University a part?

6. Explain in your own words the difference between Budgetary Basis vs. GAAP?

Basic Financial Statements

1. What % of Total Assets do Cash and Cash Equivalents (unrestricted) represent?

2. Why would the state of MN carry such a high % of cash and cash equivalents?

3. What is the amount of General Obligation Bonds Payable?

Acct 510 - MN CAFR Independent Assignment Page 2

a. Current

b. Noncurrent

c. Total

4. In descending order, list the five largest “General Revenue” sources and the dollar amounts

(exclude “Other Taxes” from your list). Hint: All are found in the tax section.

5. What is the difference between Program Revenues and General Revenues?

6. List the three largest net expenditures for the state; in the following format.

Description Expense Revenue Total Net Expenditure

1st

2nd

3rd

7. Compare Net Assets of Governmental Activities to the Total Fund Balance for Governmental

Funds.

a. What is the total difference?

b. List the largest asset and the largest liability driving this difference. Why do these

differences exist? Be specific (provide examples) in your explanation for the

difference.

c. Explain in your own words why there is a $ revenue difference.

8. Compare the Change in Net Assets of Governmental Activities to the Net Change in Fund

Balances for Governmental Funds.

a. What is the total difference?

b. List and explain the three largest reconciling differences.

9. How does the University of Minnesota compare to the State Colleges and Universities from

a financial perspective?

I need assistance with preparing journal entries for the belowitems.

This is the first year of operations for the city – 20X4. Thefollowing transactions are summarized for the city this year:

The city levied $9,000,000 of general property taxes, $8,800,000of which has been collected. It expects to collect the balanceshortly after the end of the year. These taxes are unassigned; theycan be used for any legitimate city purpose. You believe thesetaxes should be recorded in the general fund, but you decide todouble check by reviewing the GASB’s following website: Touringthe Financial Statements, Part III: The Governmental Fundsnoting the explanation for general funds.http://www.gasb.org/cs/ContentServer?pagename=GASB/GASBContent_C/UsersArticlePage&cid=1176156735732

The City received a state grant of $200,000 to purchasecomputers. This grant is restricted by the state for a specificpurpose. You need to determine in which fund you should record(categorize) the state grant for the purchase of the computers. Youremember reading in GASB Statement No. 54 that governmental fundbalance information is reported in five different classifications(nonspendable, restricted, committed, assigned and unassigned).Further, you decide to read the Fact Sheet about Fund BalanceReporting and Governmental Fund Type Definitions.

The City issued $12,000,000 in long-term bonds to construct acity building. The proceeds must be used for the intended purpose.You are unsure of the fund in which you record the proceeds of thelong-term bonds, designated to construct a city building; however,you remember the major types of expenditures: operating, capital,debt service, and intergovernmental charges. Capital expendituresrelate to the acquisition of capital assets (such as the citybuilding). You recall that such expenditures may be recorded in theGeneral Fund, Special Revenue Funds, or Capital Projects Funds,depending on the source of funding. You review the National Centerfor Education Statistics Government-wide Reporting requirements fortypes of expenditures and accounting treatments.

The City constructed the school building for $11,000,000. Youdecide to account for the construction of the school building as anexpenditure, causing the City Controller’s asking for yourjustification in doing so. In gathering information from which toprepare a response, you note two things: 1) fund accounting followsthe modified accrual basis of accounting and 2) fund accountingfinancial statements are the Fund Balance Sheet and the Statementof Fund Revenues, Expenditures, and Other Changes in Fund Balances.To prepare the memo to explain your decision to the CityController, you browse the GASB Website in search of anauthoritative explanation about the use of expenditure or expensesfor fund accounting.

Knowing that GASB Statement No. 54 provides governmental fundrequirements for constructing buildings, you search GASB for anexplanation as to why capital assets and long-term liabilities arenot included on Fund Balance Sheets. Further, you are interested inlearning more about the nature of the Statement of Fund Revenues,Expenditures and Other Changes in Fund Balances.

The City incurred $6,000,000 in general operating expenditures,$5.5. million of which has been paid. You review GASB No 54 and theGASB website to help you explain why the City uses the termexpenditures instead of expenses for fund accounting.

Using its state grant, the City purchased computers for$100,000. As with the construction of the building, the City wouldrecognize the acquisition as an expenditure. You must justify tothe City Controller why the correct recording of the computers areexpenditures, even though the City would record them as assets in asupplementary ledger or list. When the government-wide statementsare prepared, the computers would be recognized asassets.

The City transferred $1,100,000 from the general fund to thedebt service fund to make the first payments of both principal andinterest that are due the following year. Viewed as broken downinto its components, this transaction is straightforward, involvingsimple entries to each of the two funds. You research which fundsto use for this transfer using the GASB websites above and otherwebsites that you find during your research.

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