Chapter 6
6-1. The solution to this and the first exercise of Chapters 1 through 9 will differ from student to student assuming each has a different CAFR.
6-2. 1. D. GASB does not require the use of internal service funds
2. B.
3. A.
4. B.
5. D.
6. A.
7. C. (See chapter 4)
8. A. (The capital grant would be reported as capital contributions)
9. b.
10. d.
6-3. 1. C.
2. B.
3. B.
4. A.
5. C.
6. D.
7. B.
8. A.
9. D.
10. C.
6-4. CITY OF DAVIDSON
MOTOR POOL FUND
BUDGET FOR YEAR ENDED JUNE 30, 2007
Total Expenses and Payment on Loan:Salaries
Fuel and Supplies
Depreciation:
Buildings ($300,000 / 30)
Automobiles ($1,600,000 / 4)
Equipment ($150,000 / 10)
Interest ($1,000,000 X .06)
Payment on Loan
Total / $ 265,000
250,000
10,000
400,000
15,000
60,000
200,000
$1,200,000
Mileage (Est.) / 3,750,000
Mileage Charge / $0.32
6-5 (A).
CITY OF DAVIDSON
MOTOR POOL FUND
GENERAL JOURNAL
JULY 1, 2006 - JUNE 30, 2007
Debits / Credits1. / Cash
Long-Term Advance From Enterprise Fund
Transfers In / 2,500,000 / 1,000,000
1,500,000
2. / Land
Buildings
Equipment
Automobiles
Fuel and Supplies
Cash / 100,000
300,000
150,000
1,600,000
100,000 / 2,250,000
3. / Due From Other Funds
Operating Revenues-Charges for
Sales and Services
(3,800,000 Miles X $.32 Per Mile) / 1,216,000 / 1,216,000
4. / Fuel and Supplies
Accounts Payable / 200,000 / 200,000
5. / Cash
Due From Other Funds / 850,000 / 850,000
6. / Operating Expenses-Salaries
Cash / 260,000 / 260,000
7. / Operating Expenses-Fuel and Supplies
Fuel and Supplies / 270,000 / 270,000
8. / Accounts Payable
Cash / 185,000 / 185,000
9. / Nonoperating Expenses-Interest
Long-Term Advance From Enterprise Fund
Cash / 60,000
200,000 / 260,000
10. / Operating Expenses-Depreciation
Accumulated Depreciation--Buildings
Accumulated Depreciation--Automobiles
Accumulated Depreciation--Equipment / 425,000 / 10,000
400,000
15,000
6-5 (A) (Continued).
11. / Operating Revenues-Charges for Sales and
Services
Transfers In
Operating Expenses-Costs of Sales and Services
Operating Expenses-Depreciation
Nonoperating Expenses-Interest
Net Assets: Invested in Capital Assets,
Net of Related Debt
Net Assets: Unrestricted / 1,216,000
1,500,000 / 530,000
425,000
60,000
925,000*
776,000**
* Capital Assets Acquired in Transaction 2 / $2,150,000
Less: Accumulated Depreciation (Transaction 10) / 425,000
1,725,000
Long-Term Advance From Enterprise Fund
(Entry 1 Less Entry 9) / 800,000
** Net Assets-Unrestricted is a “Plug” figure. / $925,000
6-5 (B).
CITY OF DAVIDSON
MOTOR POOL FUND
STATEMENT OF NET ASSETS
JUNE 30, 2007
Assets:Current Assets:
Cash
Due From Other Funds
Fuel and Supplies
Total Current Assets / $ 395,000
366,000
30,000
791,000
Fixed Assets:
Land
Building
Less: Allowance for Depreciation
Automobiles
Less: Allowance FOR DEPRECIATION
Equipment
Less: Allowance for Depreciation
Total Fixed Assets
Total Assets / $ 300,000
(10,000)
1,600,000
( 400,000)
150,000
(15,000) / $ 100,000
290,000
1,200,000
135,000 / 1,725,000
$2,516,000
Liabilities:
Current Liabilities:
Accounts Payable
Long-Term Debt:
Advance From Enterprise Fund
Total Liabilities / 15,000
800,000 /
815,000
Net Assets:
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets / 925,000
776,000 / $1,701,000
6-5 (C).
CITY OF DAVIDSON
MOTOR POOL FUND
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2007
Operating Revenues:Charges for Sales and Services / $1,216,000
Operating Expenses:
Salaries
Fuel and Supplies
Depreciation
Total Operating Expenses / $260,000
270,000
425,000 / 955,000
Operating Income / 261,000
Nonoperating Revenues (Expenses):
Interest Expense / (60,000)
Income Before Transfers / 201,000
Transfer From General Fund / 1,500,000
Increase in Net Assets / 1,701,000
Net Assets, July 1, 2006 / ---
Net Assets, June 30, 2007 / $1,701,000
6-5 (D).
CITY OF DAVIDSON
MOTOR POOL FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2007
Cash Flows From Operating Activities:Cash Received From Departments
Cash Paid to Suppliers And Employees
Net Cash Provided by Operating
Activities / $ 850,000
(545,000) / $ 305,000
Cash Flows From Noncapital Financing
Activities:
Transfer From General Fund / 350,000
Cash Flows From Capital and Related
Financing Activities:
Advance From Enterprise Fund
Transfer From General Fund
Acquisition of Capital Assets
Partial Repayment of Advance From
Enterprise Fund
Interest Paid to Enterprise Fund
Net Cash Used for Capital and Related
Financing Activities / 1,000,000
1,150,000
(2,150,000)
(200,000)
(60,000) / (260,000)
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1, 2006
Cash and Cash Equivalents, June 30, 2007 / 395,000
-0-
$ 395,000
Reconciliation of Operating Income to Net
Cash Provided by Operating Activities:
Operating Income
Adjustments:
Depreciation Expense
Increase in Due From Other Funds
Increase in Inventory
Increase in Accounts Payable
Net Adjustments
Net Cash Provided by Operating Activities / $ 425,000
(366,000)
(30,000)
15,000 / $ 261,000
44,000
$ 305,000
6-6 (A).
TOWN OF WILSON
WATER UTILITY FUND
GENERAL JOURNAL
JULY 1, 2006 - JUNE 30, 2007
Debits / Credits1. / Accrued Expenses
Cash / 80,000 / 80,000
2. / Customer Accounts Receivable
Due From Other Funds
Operating Revenues-Charges for Sales and
Services / 1,310,000
53,000 / 1,363,000
3. / Materials and Supplies
Operating Expenses-Costs of Sales and Services
Operating Expenses-Administration
Construction Work in Progress
Accounts Payable / 215,000
343,400
200,000
212,200 / 970,600
4. / Operating Expenses-Costs of Sales and Services
Materials and Supplies / 265,700 / 265,700
5. / Accumulated Provision for Uncollectible
Accounts
Customer Accounts Receivable / 8,000 / 8,000
6. / Cash
Customer Accounts Receivable
Due From Other Funds / 1,498,400 / 1,450,000
48,400
7. / Accounts Payable
Cash / 1,035,000 / 1,035,000
8. / Nonoperating Expenses-Interest
Cash / 245,000 / 245,000
9. / Utility Plant in Service
Construction Work in Progress / 135,000 / 135,000
6-6 (A) (Continued).
10. / Operating Expenses-Depreciation
Accumulated Provision for
Depreciation of Utility Plant / 235,000 / 235,000
11. / Construction Work in Progress
Nonoperating Expenses-Interest / 25,000 / 25,000
12. / Operating Revenues-Charges for Sales and
Services
Accumulated Provision for
Uncollectible Accounts / 13,100 /
13,100
13. / Restricted Assets
Cash
Net Assets-Unrestricted
Net Assets-Restricted / 100,000
100,000 /
100,000
100,000
14. / Operating Expenses-Costs of Sales and Services
Accrued Expenses / 15,600 /
15,600
15. / Operating Revenues-Charges for Sales and
Services
Operating Expenses-Costs of Sales and
Services
Operating Expenses-Administration
Operating Expenses-Depreciation
Nonoperating Expenses-Interest
Net Assets-Unrestricted / 1,349,900 /
624,700
200,000
235,000
220,000
70,200
16. / Net Assets-Unrestricted
Net Assets-Invested in Capital Assets, Net
of Related Debt
/ 2,200 / *2,200
* / Increases -
Entry 3
Entry 11
Decreases-Entry 10 / 212,200
25,000
(235,000)
$ 2,200
6-6 (B). TOWN OF WILSON
WATER UTILITY FUND
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2007
Assets:Current and Accrued Assets:
Cash
Customer Accounts Receivable
Less Accumulated Provision
for Uncollectibles
Due From Other Funds
Materials and Supplies
Total Current and Accrued Assets / $152,000
(15,100) / $118,400
136,900
4,600
69,300 / $ 329,200
Other Property and Investments:
Restricted Assets / 400,000
Utility Plant:
Utility Plant in Service
Less Accumulated Depreciation
Utility Plant-Net
Construction Work in Progress
Net Utility Plant
Total Assets / 7,235,000
(2,835,000) / 4,400,000
202,200 / 4,602,200
$5,331,400
Liabilities:
Current Liabilities:
Accounts Payable
Accrued Expenses
Total Current Liabilities / $ 65,600
15,600
81,200
Long-Term Debt:
Revenue Bonds Payable
Total Liabilities / 3,500,000 / 3,581,200
Net Assets:
Invested in Capital Assets, Net of Related Debt Restricted
Unrestricted
Total Net Assets / (1) 1,102,200
(2) 400,000
(3) 248,000 / $1,750,200
(1) / $1,100,000 + $2,200 (entry 16) = / $1,102,200
(2) / $300,000 + $100,000 (entry 13) = / $ 400,000
(3) / $280,000 - $100,000 (entry 13) +
$70,200 (entry 15) - $2,200
(entry 16) = / $248,000
6-6 (C).
TOWN OF WILSON
WATER UTILITY FUND
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2007
Operating Revenues:Charges for Sales and Services
Operating Expenses:
Costs of Sales and Services
Administration
Depreciation
Total Operating Expenses / $624,700
200,000
235,000 / $1,349,900
1,059,700
Operating Income
Nonoperating Revenues (Expenses):
Interest on Long-term Debt / 290,200
(220,000)
Change in Net Assets / 70,200
Net Assets - July 1, 2006 / 1,680,000
Net Assets - June 30, 2007 / $1,750,200
6-6 (D).
TOWN OF WILSON
WATER UTILITY FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2007
Cash Flows From Operating Activities:Cash Received From Customers
Cash Paid to Suppliers and Employees (1)
Net Cash Provided by Operating Activities
Cash Flows From Capital and Related
Financing Activities:
Interest Paid on Long-Term Debt
Construction of Fixed Assets
Net Cash Used for Capital and
Related Financing Activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1, 2006
Cash and Cash Equivalents, June 30, 2007 / $1,498,400
( 902,800)
595,600
( 245,000)
( 212,200)
( 457,200)
138,400
380,000
$ 518,400
RECONCILIATION OF NET OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating IncomeAdjustments:
Depreciation Expense
Decrease in Customer Accounts
Receivable (Net)
Increase in Interfund Receivables
Decrease in Materials and Supplies
Decrease in Accounts Payable
Decrease in Accrued Expenses
Total Adjustments
Net Cash Provided by Operating
Activities / $235,000
153,100
( 4,600)
50,700
( 64,400)
( 64,400) / $290,200
305,400
$595,600
NOTE:
(1) Cash Paid to Suppliers and Employees =
$80,000 (#1) + $1,035,000 (#7) - $212,200 (Const. WIP in entry #3) = $902,800.
6-7 (A).
CITY OF SANDWICH
SWIMMING POOL FUND
GENERAL JOURNAL
JANUARY 1 - DECEMBER 31, 2007
Debits / Credits1. / Cash
Transfers In
Notes Payable / 500,000 / 200,000
300,000
2. / Cash
Due to Water Utility Fund / 100,000 / 100,000
3. / Land
Improvements Other Than Buildings
Buildings
Cash / 100,000
300,000
100,000 / 500,000
4. / Cash
Operating Revenues-Charges for Sales and
Services / 240,000 / 240,000
5. / Operating Expenses-Costs of Sales and Services
Operating Expenses-Administration
Cash / 100,000
30,000 / 130,000
6. / Supplies Inventory
Cash / 30,000 / 30,000
Operating Expenses-Costs of Sales and Services
Supplies Inventory / 25,000 / 25,000
7. / Operating Expenses-Administration
Cash / 12,000 / 12,000
8. / Nonoperating Expenses-Interest
Cash / 9,000 / 9,000
9. / Due to Water Utility Fund
Cash / 100,000 / 100,000
10. / Operating Expenses-Depreciation
Accumulated Depreciation--Improvements
Other Than Buildings
Accumulated Depreciation-Buildings / 30,000 / 22,500
7,500
6-7 (A) (Continued).
11. / Nonoperating Expenses-Interest
Accrued Interest Payable / 4,500 / 4,500
12.
* / Transfers In
Operating Revenues-Charges for Sales and
Services
Operating Expenses-Costs of Sales and
Services
Operating Expenses-Administration
Operating Expenses-Depreciation
Nonoperating Expenses-Interest
Net Assets-Unreserved
Net Assets-Unrestricted
Net Assets-Invested in Capital Assets, Net
of Related Debt
Fixed Assets (entry 3)
Accumulated Depreciation (entry 10)
Notes Payable / 200,000
240,000
170,000 / 125,000
42,000
30,000
13,500
229,500
*170,000
$500,000
(30,000)
470,000
300,000
$170,000
6-7 (B). CITY OF SANDWICH
SWIMMING POOL FUND
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN FUND NET ASSETS
YEAR ENDED DECEMBER 31, 2007
Operating Revenues:Charges for Sales and Services
Operating Expenses:
Costs of Sales and Services
Administration
Depreciation / $125,000
42,000
30,000 / $240,000
197,900
Operating Income / 43,000
Nonoperating Expenses:
Interest
Income Before Transfers
Transfer From General Fund
Change in Net Assets / (13,500)
29,500
200,000
229,500
Net Assets – January 1, 2007
Net Assets- December 31, 2007 / -0-
$229,500
6-1
6-7 (C).
CITY OF SANDWICH
SWIMMING POOL FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 2007
Assets:Current Assets:
Cash
Supplies
Total Current Assets / $59,000
5,000
64,000
Fixed Assets:
Land
Improvements Other Than Buildings
Less: Accumulated Depreciation
Buildings
Less: Accumulated Depreciation
Total Fixed Assets / $300,000
(22,500)
100,000
(7,500) / $100,000
277,500
92,500 / 470,000
Total Assets / $534,000
Liabilities:
Current Liabilities:
Accrued Interest Payable / $4,500
Long-Term Liabilities:
Notes Payable to Bank
Total Liabilities / 300,000
304,500
Net Assets:
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Fund Equity / 170,000
59,500
$229,500
6-7 (D).
CITY OF SANDWICH
SWIMMING POOL FUND
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2007
Cash Flows From Operating Activities:Cash Received From Customers
Cash Paid to Suppliers and Employees
Net Cash Provided by Operating Activities / $240,000
( 172,000)
68,000
Cash Flows From Noncapital Financing Activities:
Short-Term Loan From Water Utility Fund
Repayment of Loan to Water Utility Fund
New Cash Provided by Noncapital Financing
Activities / $ 100,000
(100,000) / -0-
Cash Flows From Capital and Related Financing
Activities:
Equity Transfer From General Fund
Loan From Bank
Acquisition of Capital Assets
Interest Paid to Bank
Net Cash Used for Capital and Related
Financing Activities / 200,000
300,000
(500,000)
( 9,000) / ( 9,000)
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, January 1, 2007
Cash and Cash Equivalents, December 31, 2007 / 59,000
-0-
$59,000
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities:
Operating Income / $43,000
Adjustments:
Depreciation
Increase in Supplies
Net Adjustments / $30,000
( 5,000) / 25,000
Net Cash Provided by Operating Activities / $68,000
6-8.
VILLAGE OF PARRY - PRINT SHOP FUND
STATEMENT OF CASH FLOWS-
YEAR ENDED APRIL 30, 2007
Cash Flows From Operating Activities:Cash Received From Departments
Cash Paid for Salaries and Benefits
Cash Paid to Suppliers
Cash Paid for Utilities
Net Cash Provided by Operating Activities / $990,000
(490,000)
(205,000)
( 69,000)
226,000
Cash Flows From Noncapital Financing Activities:
Transfer From Water Utility Fund for Working Capital Needs / 80,000
Cash Flows From Capital and Related Financing Activities:
Transfer From General Fund
Loan From Water Utility Fund
Purchase of Equipment
Payment of Interest
Net Cash Used for Capital and Related Financing
Activities / 100,000
300,000
( 450,000)
( 48,000)
( 98,000)
Cash Flows From Investing Activities:
Collection of Interest
Purchase of Investments
Net Cash Used for Investing Activities / 25,000
(100,000)
( 75,000)
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, May 1, 2006
Cash and Cash Equivalents, April 30, 2007 / 133,000
100,000
$233,000
RECONCILIATION OF OPERATING INCOME TO