Answer:
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.
Answer:
Proprietors funds are the kind of funds that are used in government accounting under which enterprises is involved in the distribution of the goods or services to the public or other government department in exchange of the fees.
Under this capital asset and long term debt which are used are recorded in each proprietary fund. There are two types of funds which are recognized: internal and external where internal fund is about providing goods and services to the other government department and external fund is about providing goods and services to the public.
In order to improve the efficiency of the management of the government department a fund is created known as internal service fund under which all the activities which produce goods and services are provided to the other government department are accounted on the basis of cost reimbursement. Such funds are established only by the prior approval legislative.
In current scenario it can be noticed that government is diversifying itself into self insurance for some of their risk financing activities In order to make the final payment of the claims a self insurance fund is created where premium on inter fund is treated as services used. Payment or accruals of any claim give rise to recording of the operating expenses in self insurance fund.
Town of F self insurance some of its liability for which it create risk management funds.
Few transactions are made for which it is required to:
a.
Pass Journal entry for given transaction:
1.
Risk management fund is created by transferring certain amount from General fund and water utility fund:
As cash balance is increased the cash account is debited and general fund and water utility fund is credited.
2.
Insurance coverage (prepaid insurance) was purchased by the risk management fund.
As risk insurance charge was purchased therefore debited and cash id credited.
3.
Equipment for office was purchased.
As equipment was purchased therefore the account of office equipment was debited and cash credited.
4.
Investments were made in marketable securities.
As investments are made it increases the balance if investment account therefore debited and cash account is credited.
5.
Estimated were made from different departments:
As cash was due to be received therefore account receivable is debited and all other fund is credited.
6.
Cash received from general utility and water utility:
As cash is received by the general fund and water utility therefore cash is debited and other fund is credited.
7.
Dividends and interest received
As cash is received therefore is debited and interest and dividends are non operating revenue therefore are credited.
8.
Salary for the fund is paid:
Salary is an operating expenses therefore is debited and cash is paid therefore is credited.
9.
Claims for one year were paid:
As claim is operating expenses is paid therefore is debited and cash is credited.
10.
Equipment of the office is depreciated.
As depreciation is an expenses therefore is debited and accumulated depreciation is credited.
11.
Insurance policies were purchased and expired in January.
As policies are purchased and expired on January therefore operating expenses is debited and prepaid insurance is credited.
12.
Market value of the investment is $456,000
As there is increase in the value of investment therefore the increase is credited and investment is debited.
13.
Claims paid earlier is treated as liability
As claims paid earlier were treated as liability therefore account payable is credited and insurance claims are debited as it is expenses.
14.
Journal entry for closing entries:
As entries are to be closed therefore revenue is debited and expenses and net position is credited.
b.
Prepare statement of revenue and expenses:
c.
Prepare the statement of net position section of balance sheet:
d.
Prepare the cash flow statement:
Cash flow statement:
Cash flows statements are prepared in order to determine the fund flowing in and out because of operations, finances and investing activities which are the most common activities to take place in the day- to- day accounting transactions. Hence the cash flow statements specify the flow of funds individually for each of the activities investing, financing and operations.
Operating activities:
In operating activities section Company has to record transactions which are related to business operations like revenue, expenses paid, gain or loss on sale of the assets, depreciation or amortization, current assets, and current liabilities. This section will be prepared in two types direct and indirect methods.
Financing activities:
In this section Company has to record transactions which are related to long term liabilities and equity sections. If cash collected from these sources company will be recorded as cash inflow, if cash has repaid to them company will record as cash out flow. Common stock, dividends, bonds, and long term loans are some of the examples for this section.
Investing activities:
In this section Company has to record transactions which are related to assets purchase and sale. Purchase of asset recorded as cash out flow and sales will be recorded as cash inflow. Furniture, building, plant, equipment, land, and long term investments are some of the examples for this section.
Cash flow statement:
e.
Explanation:
The inter fund premium collected from salaries and wages payable is measured as too low therefore it would be better if the town collects at least of 10-20% of premium, so that the employees as well as town would be benefited. The benefit would be in form of increased non taxable revenues
Answer:
Proprietors funds are the kind of funds that are used in government accounting under which enterprises is involved in the distribution of the goods or services to the public or other government department in exchange of the fees.
Under this capital asset and long term debt which are used are recorded in each proprietary fund. There are two types of funds which are recognized: internal and external where internal fund is about providing goods and services to the other government department and external fund is about providing goods and services to the public.
Town of W provides water utility and the trial balance for Town is given and it is required to:
a.
Pass journal entry:
1.
On June 1 accrued expenses were paid in cash.
As cash is paid therefore credited and expenses are debited
2.
Bills for non government customers are $1,400,000 and for general fund is $107,000.
As bills are received by the government therefore is treated as income therefore total amount of bill received is credited as operating revenues.
3.
All the liabilities to be paid:
As all the expenses are yet to be paid therefore credited with the account payable and all the expenses are debited.
4.
Material and supplies used for cost of sales.
Usage of material and supplies as cost of sales increases the cost therefore cost of sales is debited and material and supplies are credited.
5.
Old account receivables were written off:
As accounts receivables were written off therefore were increased and thus debited and customer account receivables were credited.
6.
All account receivables were received from government and other funds
As cash is received therefore debited and were paid by customers and other funds thus customers account are credited.
7.
Account payable of $1,035,000were paid in cash.
As accounts payable are paid thus it is reduced therefore account payable is debited and cash is paid therefore is credited.
8.
Interest was paid in cash
As interest is an expenses therefore is debited and cash is paid therefore is credited.
9.
Construction which was completed which was transferred to utility plant in services.
As transfer to utility in plant increases the amount of utility in plant thus is debited and construction account is credited.
10.
Recording of depreciation:
As depreciation is an expense therefore debited and accumulated depreciation is credited.
11.
Interest of $25,000 was charged to construction account.
As interest is reduced therefore is credited and charge to construction account increases its amount thus debited.
12.
Allowance for uncollectable accounts were increased
As allowance is increased therefore credited and charge for sales is debited.
13.
For redemption of bonds an amount of $100,000 were transferred to restricted asset
As cash is reduced therefore is credited and balance of restricted asset is increased therefore is debited.
14.
Accrued expenses and cost of sales amount to $63,000
As cost of sales is expenses therefore debited and accrued expenses is yet to be paid therefore is credited.
15.
Closing entry for nominal account:
All the expenses are to be credited and income to be debited.
b.
Prepare statement of revenue, expenditure and change in funds.
c.
The following table shows the preparation of net position section of balance sheet :
Statement of Net position for June 30, 2015:
d.
Prepare cash flow statement:
Cash flow statement:
Cash flow statement is one of the important and mandatory reports from the company's financial reports. Cash flow statement records the transactions which are related to cash, and cash equivalents. It shows how cash is coming into the company and how it is going; and it will be prepared for one particular accounting period. This statement is divided into three parts operating, investing and financing.
Operating activities:
In operating activities section Company has to record transactions which are related to business operations like revenue, expenses paid, gain or loss on sale of the assets, depreciation or amortization, current assets, and current liabilities. This section will be prepared in two types direct and indirect methods.
Investing activities:
In this section Company has to record transactions which are related to assets purchase and sale. Purchase of asset recorded as cash out flow and sales will be recorded as cash inflow. Furniture, building, plant, equipment, land, and long term investments are some of the examples for this section.
Financing activities:
In this section Company has to record transactions which are related to long term liabilities and equity sections. If cash collected from these sources company will be recorded as cash inflow, if cash has repaid to them company will record as cash out flow. Common stock, dividends, bonds, and long term loans are some of the examples for this section.
Cash flow statement:
Working note:
1.