GOVERNMENTAL ACCOUNTING FINAL PROJECT Due February 28th Name _____________________________________________________ Part I: Identify the fund Utilizing the information below, indicate based on the number that corresponds to the transaction, which fund or funds are impacted and give a brief explanation of your choice. Part II: Governmental Funds Review all of the journal entries in each excel template and if necessary, make corrections to your fund classifications table.Prepare the budget for the General Fund ( Information for this entry is #4 below)Post the budgetary accounts to the t-accountsPrepare closing entries for the General Funds – (Fund Balance Classification information located in #30 below)Prepare the closing entries for the debt service and capital project fundsPrepare the financial statements for the Governmental Funds Part III Using the template, prepare closing entries for the Enterprise FundsUsing the Template, prepare the 3 financial statements for the Enterprise Funds and prepare the statement of cashflow reconciliation. Part IV Explain the process of going from fund basis financial statements to Government Wide. Include in your discussion some of the common adjustments that need to be made to the governmental accounts and explain why adjustments are not needed for proprietary funds.Prepare the Government Wide Financial statements. Check figures: General fund cash: $ 371,626 General fund unassigned fund balance 33,603 Governmental funds: Total fund balance 999,126 Enterprise fund cash: 187,500 Enterprise fund net position: 1,458,083 A set of Excel templates (Excel) are available for your use. Please post this completed document and your completed excel worksheets onto Blackboard. Part I: Identify the fund Utilizing the information below, indicate based on the number that corresponds to the transaction, which fund or funds are impacted and give a brief explanation of your choice. A few of the transactions are done as an example Transaction NumberFund or Funds Impacted (General, Capital Projects, Debt Service, Enterprise)Rationale for choice1General FundFor general governmental operations3General Fund & Enterprise FundTransfer between General Fund and Enterprise Fund4General FundPer GASB the general fund and special revenue funds are required to establish a budget, the other funds ( Capital project and enterprise funds) to not have budgetary requirements5 6 7 8 9 11 12Debt Service and Capital ProjectBonds issued are to be used for the Capital Project13Capital Project FundEncumbrance needs to be established14 17 18 19 20 21 22 23 24 25 26 27 28 PROVINCE OF EUROPA Transaction list for the year ended December 31, 2091 Account Structure: Because the Province has a limited number of revenue sources, revenue control accounts are not used. Rather, General Fund revenues are directly recorded into the following accounts (property taxes, sales taxes, fees licenses and permits, program fees, and intergovernmental grants) Similarly, expenditures are recorded directly into the following accounts: (general government operations, public safety, education, capital outlay, and debt service: principal and interest). The Province established the Bureau of Electricity and Water to operate as an enterprise fund. The enterprise fund reports expenses by object category using the following account titles: (salaries, supplies, depreciation, and interest). There are no fiduciary, special revenue, permanent, or internal service funds. The government uses account groups to record general fixed assets and general long-term debt. Beginning Balances: 1. At 12-31-2090, the remaining cash and supplies on hand in the government offices were transferred to the new Province government. The opening trial balance for the Province for 1-1-2091 was as follows: GENERAL FUND trial balance Jan. 1, 2091 debits credits Cash 26,000 Fund Balance: Supplies 13,000 Assigned (Reserved for encumbrances ) 9,288 _______ Unassigned 29,712 39,000 39,000 The supplies were office supplies for general government operations. The reserve for encumbrances relates to a purchase order placed in December of 2090 for engineering services (see item # 7,below). The Province honors outstanding encumbrances from previous years and the encumbrance should be re-established for 2091. For purposes of the Budgetary Comparison Statement, amounts are charged to the budget in the year they are initially encumbered, regardless of when the expenditure is incurred. 2. On December 31, 2090, the United Earth Council (U.E.C.) transferred the following capital assets. The Province Council assigned custody of these assets to the general Province government and the Bureau of Electricity and Water as follows: General Useful Salvage Government Bureau Life Value Land $ 2,000,000 $900,000 Buildings, roads, and other structures 1,395,000 450,000 10 $ 0 Equipment 480,000 150,000 5 0 Geothermal Generators 0 650,000 5 0 Total $3,875,000 $2,150,000 ========== ========== In return for these assets, the Province government issued $1,875,000, 10 percent general obligation serial bonds. Principal payments of $93,750 and interest payments on the bonds are to be paid at the end of each year starting on December 31, 2091. Similarly, the Bureau of Electricity and Water issued (at face value) $1,250,000, 10 percent long-term revenue bonds in exchange for the capital assets listed above. The bonds call for annual interest payments on January 1 and mature on January 1, 2101. Since these events occurred on the last day of 2090, they represent beginning balances for 2091. Note: (The difference between the asset values and the debt issued is properly recorded as beginning Net Position in the financial statements prepared using the economic resource measurement focus). Current Year Transactions: 3. The government of the Europa Province established the Bureau of Electricity and Water. The Bureau of Electricity and Water is in charge of providing the power and water for residents and the Province government. On January 1, 2091, the Province government agreed to contribute $300,000 for establishment of the Bureau of Electricity and Water, and transferred cash on February 1, 2091. 4. On January 1, 2091, The Province Council approved budgets for 2091 as follows: Budget ItemsProvince Government (General Fund) Capital AdditionsBureau of Electricity and WaterRevenue and other financing sources Property Taxes Sales Taxes Fees, Licenses and Permits Charges for Services (Bureau) Program Fees: Education Intergovernmental grants Transfer from General Fund Proceeds from Bond Issues $3,665,000 750,000 250,000 70,000 510,000 $ 500,000 2,500,000 $3,250,000 300,000 1,250,000Expenditures/expenses and other financing uses: General government operations Public Safety Education Operating expenses (Bureau) Capital Outlays Transfers to other funds 1,500,000 1,400,000 1,190,000 1,100,000 2,750,000 3,000,000 1,875,000 5. On January 10, 2091, a cash grant of $510,000 was received from the United Earth Council for operation of the Province. The grant provisions stipulate the funds are to be used to supplement general operations of the government. 6. On January 31, 2091, $3,700,000 in property taxes were levied. Of this, $18,500 (0.5% of property taxes) is estimated to be uncollectible. The remaining tax bills are expected to be collected within 60 days following the end of the fiscal year. During 2091, $3,520,000 was collected and $13,000 are identified as uncollectible and written off. 7. On January 5, 2091 the engineering report ordered in December of the previous year (see item 1 above) was received along with an invoice for of $ 9,124. The invoice was immediately paid. The engineering report was for general government operations. 8. During 2091, the Province government placed orders amounting to $940,000 for supplies. All the supplies ordered were received during the year with an invoice price of $935,000 (there are no outstanding encumbrances for supplies). $900,000 was paid during the year. The supplies were distributed by major functions of government as follows: General Public Operation Safety Education Total Order placed $ 390,000 $ 400,000 $ 150,000 $ 940,000 Invoice prices 395,000 400,000 140,000 935,000 The government uses the consumption method of recording supplies – (i.e. expenditure is determined by the amount of supplies used – not purchased – during a period). 9. During 2091 the Bureau of Electricity and Water placed orders amounting to $1,200,000 for supplies. The supplies were received with an invoice price of $1,140,000. Of this $1,087,000 was paid before year end. 10. The Province Council approved the construction of a new school building at an estimated cost of 3,000,000. The issuance of $2,500,000 in general obligation long-term bonds was authorized to finance the cost of construction. In addition, the Province government agreed to provide $500,000 for the construction project. 11. On March 31, 2091, the Province government transferred $500,000 to the school building capital project. 12. On April 1, 2091, $2,500,000 in 10 percent general obligation long-term bonds were issued for $2,580,000. The premium of $80,000 was reserved for redemption of the bonds while the principal was set aside for construction of the school. The bonds call for annual interest payments on March 31, and mature on April 1, 2111. 13. On June 1, 2091, the school building contract was awarded to the lowest bidder for $2,680,000, including planning and architect’s fees. 14. On November 30, 2091, the progress billings of $2,280,000 for the school building were received from the contractor and $ 1,250,000 was paid on December 31, 2091. The remaining balance is expected to be paid in January, 2092. Liabilities resulting from capital additions are recorded in “Contracts Payable”, (rather than Accounts Payable). 15. The Board of the Bureau of Electricity and Water approved the construction of an office building at an estimated cost of $880,000. 16. On July 1, 2091, the office building contract was signed in the amount of $865,000, including planning and architect’s fees. 17. On October 30, 2091, construction was completed and $782,500 was paid on the contract. The remaining portion ($ 82,500) will be paid following final inspection on January 15, 2092. Liabilities resulting from capital additions are recorded in “Contracts Payable”, (rather than Accounts Payable) 18. At the end of November, fire equipment was ordered for the public safety department at an estimated cost of $49,523. The units have not been delivered as of December 31, 2091. 19. During 2091, the Province government received the following cash collections: Sales taxes $ 756,000 Permits, fees & licenses 312,000 Program Fees: Education 80,000 $1,148,000 ========= 20. Salaries and wages of $4,150,000 were incurred and paid by the Province government and the Bureau of Electricity and Water during 2091. Salaries and wages are classified by governmental functions as follows: Incurred & Paid General operation $ 837,000 Public safety 775,000 Education 725,000 Bureau of Electricity Water 1,813,000 Total $ 4,150,000 ============ 21. During 2091, the Bureau of Electricity and Water billed the Province government and the residents for electricity and water services in the amounts of $920,000 and $2,675,000 respectively. The Bureau estimated that 2% of the gross revenue from the residents will be uncollectible. During 2091, $805,000 and $2,115,000 of the bills sent to the Province government and the residents, respectively, are collected. $18,500 of the bills sent to the residents are identified as uncollectible and written off. The electricity and water services provided to the Province government were charged by government functions as follows: General operation $ 350,000 Public safety 250,000 Education 320,000 22. $281,250 was removed from general government funds and set aside for payments on outstanding general obligation serial bonds. 23. On December 31, 2091, the Province government made principal payment of $93,750 and annual interest of $187,500 on the general obligation serial bonds. 24. As of December 31, 2091, physical inventories of supplies on hand report the following: General operation $ 116,000 Public safety 0 Education 0 Bureau of Electricity Water 14,000 25. On December 31, 2091, the Bureau of Electricity and Water accrued annual interest on the 10% bonds ($1,250,000 face value) described in item # 2. 26. The Province government and the Bureau of Electricity and Water recorded depreciation for 2091 using the straight-line method. The new office building is estimated to have zero salvage value and 10-year useful life and is depreciated on a monthly basis, beginning with the month (November) it was placed in service. 27. On December 31, 2091 the Bureau of Electricity and Water borrowed $650,000 on a 90 day note payable to cover a temporary cash shortfall. 28. On December 31, 2091, $300,000 was borrowed on a 60 day note payable to cover a temporary cash shortfall in general government operations. 29. The bond premium is amortized using the straight-line basis over 20 years. (9 months of amortization is recognized in 2091). 30. For purposes of classifying fund balances in the governmental funds, assume: Supplies are the only nonspendable resource,The outstanding encumbrances in the General Fund are classified as Assigned for capital asset acquisitionsThe residual balances of the debt service funds are classified as assigned. The residual balances of capital projects funds are classified as restricted. 31. Prepare closing entries, where appropriate. Do NOT post the closing entries to the t-accounts. Part IV: Government-wide Explanation Explain the process of going from fund basis financial statements to Government Wide. Include in your discussion some of the common adjustments that need to be made to the governmental accounts and explain why adjustments are not needed for proprietary funds.Complete the Financial Statements on the Government Wide Template
