CHAPTER 5.

Accounting for Other Governmental Funds

ACCT 621 INSTRUCTORS NOTES Without Homework

(12th Edition)Chapter 5 Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent5-1.The solution to this and the first exercise of Chapters 1 through 8 will differ from student to student, assuming each has a different CAFR.

5-2. In determining the appropriate fund to record the trust, it is important to determine: (1) whether the trust benefits the government or its citizenry or (2) alternatively whether the trust benefits individuals, private organizations or other governments.

if the trust benefits individuals, private organizations or other governments, it should be reported in the private-purpose trust fund, a fiduciary type fund.

If the trust benefits the government or its citizenry, it is important to determine whether the trust principal must be maintained or alternatively, if it can be expended for purposes supported by the trust. If the trust principal must be maintained, the trust should be reported in a permanent fund. If there is no requirement to maintain the principal, it should be reported in a special revenue fund.

5-3. At the inception of the lease, the present value of the minimum lease payments should be reported as a capital expenditure and an other financing source within an appropriate governmental type fund (typically the General Fund or a capital projects fund). Rental payments would typically be reported as interest and principal expenditures in the General Fund or a debt service fund.

At fiscal year end, the leased asset should be reflected in the Government-wide Statement of Net position as a capital asset at net book value (i.e. the present value of the minimum lease payments at the inception of the lease less accumulated depreciation). Similarly, the unpaid balance of the lease obligation should be reported in the Government-wide Statement of Net position as a liability.5-4 (A)

SPENCER COUNTY

COURTHOUSE ANNEX CAPITAL PROJECTS FUNDGENERAL JOURNAL

CLOSING ENTRY Debits Credits

Other Financing Sources-Proceeds of Bonds

Other Financing Sources-Premium on Bonds

Intergovernmental revenue

Capital Expenditures

Other Financing Uses-Transfers Out

Fund balance2,000,000

45,000

400,0001,850,000 45,000

550,000

Budgetary Fund Balance Reserve for Encumbrances Encumbrances

85,00085,000

5-4 (b)SPENCER COUNTY

COURTHOUSE ANNEX CAPITAL PROJECTS FUND

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE

YEAR ENDED JUNE 30, 2015Revenues: Intergovernmental Grant $ 400,000

Expenditures:

Capital Outlay1,850,000

Excess (Deficiency) of Revenues Over Expenditures

Other Financing Sources (Uses)

Proceeds of Bonds

Bond Premium

Transfers Out(1,450,000)

2,000,000

45,000

(45,000)

Total Other Financing Sources (Uses)2,000,000

Net Change in Fund Balance550,000

Fund Balance, Jan. 1, 2015 --0--

Fund Balance, Dec. 31, 2015$ 550,000

5-4 (c)SPENCER COUNTY

COURTHOUSE ANNEX CAPITAL PROJECTS FUND

BALANCE SHEET

AS OF DECEMBER 31, 2015Cash$ 900,000

Due from state government 200,000

Total Assets$1,100,000

Liabilities:

Contract Payable$ 550,000

Fund Balance:

Restricted for courthouse annex550,000

Total Liabilities and Fund balance$1,100,000

5-6 (A).

ARMSTRONG COUNTY

COUNTY OFFICE BUILDING CONSTRUCTION FUND

CAPITAL PROJECTS FUND GENERAL JOURNAL

Debits Credits

1.Cash

Other Financing Sources-

Proceeds of Bonds8,500,0008,500,000

2.Encumbrances Control

Budgetary fund balance - Reserve for encumbrances8,400,0008,400,000

3.Budgetary fund balance - Reserve for encumbrances Encumbrances Control

Construction Expenditures

Contracts Payable

Contracts Payable

Contracts Payable-Retained Percentage

Cash6,000,000

6,000,000

6,000,0006,000,000

6,000,000

300,000

5,700,000

4.Budgetary fund balance - Reserve for encumbrances Encumbrances Control

Construction Expenditures

Contracts Payable

Contracts Payable

Contracts Payable-Retained Percentage

Cash2,400,000

2,400,000

2,400,000

2,400,000

2,400,000

120,000

2,280,000

5.Contracts Payable-Retained Percentage

Construction Expenditures

Accounts Payable420,000

97,000517,000

6a..Accounts Payable

Cash517,000517,000

6b.Other Financing Uses-Transfers Out

Cash3,0003,000

7.Other Financing Sources-Proceeds of Bonds

Construction Expenditures

Other Financing Uses-Transfers Out8,500,0008,497,000

3,000

5-6 (B).

ARMSTRONG COUNTY

COUNTY OFFICE BUILDING CONSTRUCTION FUND

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE

YEAR ENDED JUNE 30, 2015Revenues:$ --0--

Expenditures:

Capital Outlay8,497,000

Excess (Deficiency) of Revenues Over Expenditures

Other Financing Sources (Uses)

Proceeds of Bonds

Transfers Out(8,497,000)

8,500,000

(3,000)

Total Other Financing Sources (Uses)8,497,000

Net Change in Fund Balance--0--

Fund Balance, July 1, 2014 --0--

Fund Balance, June 30, 2015$ --0--

5-9 (A)VILLAGE OF BUDEKVILLE

GENERAL JOURNAL

CAPITAL PROJECTS FUND

DebitsCredits

1.Cash

Other Financing Sources-Proceeds of Bonds3,000,0003,000,000

2.No entry in capital projects

3.Construction Expenditures

Cash2,997,0002,997,000

4.Other Financing Uses-Transfers Out

Cash3,0003,000

CEseq level0 \h \r0

seq level1 \h \r0

seq level2 \h \r0

seq level3 \h \r0

seq level4 \h \r0

seq level5 \h \r0

seq level6 \h \r0

seq level7 \h \r0 Capital Projects FundOther Financing Sources-Proceeds of Bonds

Construction Expenditures

Other Financing Uses-Transfers Out3,000,0002,997,000

3,000

5-9 (B) VILLAGE OF BUDEKVILLE

GENERAL JOURNAL

DEBT SERVICE FUND

DebitsCredits

1.No entry in debt service fund

2.Cash

Other Financing Sources-Transfers In

($ 3,000,000 * 4% *6/12)

60,00060,000

Expenditures-Interest

Cash60,00060,000

3.No entry in debt service fund

4.Cash

Other Financing Sources-Transfers In3,0003,000

CEOther Financing Sources-Transfers In

Expenditures-Bond Interest

Fund Balance63,000

60,000

3,000

5-9 (C)

VILLAGE OF BUDEKVILLESTATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2015GeneralPOLICE STATION

ConstructionDEBT

SERVICE

FUNDTotal

Governmental

Funds

Revenues:

Property Taxes

Other

Total RevenuesTotal Revenues$ 512,000

200,000

712,000$ 512,000

200,000

712,000

Expenditures:

Current:

General Government

Public Safety

Capital Outlay 149,000

450,000

2,997,000 149,000 450,000 2,997,000

Debt Service:

Principal

Interest

Total Expenditures________

599,000________ 2,997,0000 60,000 60,000 0

60,000

3,656,000

Excess (Deficiency) of

Revenues Over

Expenditures 113,000(2,997,000)(60,000)( 2,944,000)

Other Financing Sources(Uses):

Proceeds of Bonds

Transfers In

Transfers Out

Total Other Financing

Sources(Uses) Total Revenues( 125,000)

(125,000)3,000,000 (3,000) 2,997,000 63,000

________

63,0003,000,000

63,000( 128,000)

2, 935,000

Net Change in Fund Balances (12,000) 0 3,000 (9,000)

Fund Balances-Beginning175,000 0 0 175,000

Fund Balances-Ending$163,000 $ 0$ 3,000$ 166,000

5-10(A)CITY OF GENOA

GENERAL JOURNAL

Debits Credits

Capital Projects Fund 7/1/2014Expenditures-Capital Outlay

Other Financing Sources-Capital Lease Agreements

Cash$68,190$53,19015,000

(funds provided for future lease agreements =present value of four $15,000 payments, discounted at 5 percent = $53,190)

Debt Service Fund July 1, 2015Expenditures-Interest

Expenditures-Principal

Cash2,66012,34015,000

(Interest = $53,190 x .05 = $2,660. Principal = $15,000 $2,660 = $12,340)

5-10 (B)

The fixed asset and long-term liability associated with this capital lease

agreement would both be reported in the Government-Wide Statements. As of July 1, 2014, the fixed asset would be recorded in the amount of $68,190. Annual depreciation would be based on that amount. On July 1, 2014, a long-term liability would be recorded in the amount of $53,190. On July 1, 2015, the liability would be reduced by $12,340 to $40,850.

5-11.TOWN OF MCHENRY

DEBT SERVICE FUND

GENERAL JOURNAL

Debits Credits

Cash

Other Financing Sources-Refunding Bonds Issued8,000,0008,000,000

Other Financing Uses-Refunding of Existing Debt

Cash8,000,0008,000,000

5-13 (A) Solutions to the Excel based exercises are also available in Excel on the instructors website

Jefferson County

Capital Project Fund Journal Entries

December 31, 2015

Account Title Debits Credits

1Cash 722,800

Other financing sources - proceeds of bonds 700,000

Other financing sources - premium on bonds 22,800

Other financing uses - transfers out 22,800

Cash 22,800

2Due from other governments 280,000

Intergovernmental revenues 280,000

3Encumbrances 1,000,000

Budgetary Fund Balance - Reserve for encumbrances 1,000,000

4Capital expenditures 612,000

Contracts payable 612,000

Budgetary Fund Balance - Reserve for encumbrances 612,000

Encumbrances 612,000

Contracts payable 587,000

Cash 587,000

Jefferson County

Debt Service Fund Journal Entries

December 31, 2015

Account Title Debits Credits

5Cash22,800

Other financing sources - transfers in22,800

6Cash43,000

Other financing sources - transfers in43,000

7Expenditures - bond principal22,000

Expenditures - bond interest21,000

Cash43,000

Jefferson County

Permanent Fund (Elwood Family Book) Journal Entries

December 31, 2015

Account Title Debits Credits

8Cash 130,000

Investments in corporate bonds 370,000

Receivable from grantor 500,000

9Investment in US government securities 130,000

Cash 130,000

10Cash 17,000

Revenues - investment income - interest 17,000

11No entry - Permanent funds typically do not record encumbrances

12Expenditures - Library 12,700

Accounts payable 12,700

Accounts payable 8,600

Cash 8,600

13Accrued interest receivable 1,700

Revenues - investment income - interest 1,700

14Investment in corporate bonds 3,000

Investment in US government securities 600

Revenues - net increase in fair value of investments 2,400

5-13 (C)

Jefferson County

Capital project Fund Closing Entries

December 31, 2015

Account Title Debits Credits

Intergovernmental revenue280,000

OFS - proceeds of bonds700,000

OFS - premium on bonds22,800

Fund balance368,000

Capital Expenditures612,000

OFU - Transfers out22,800

Budgetary Fund Balance - Reserve for Encumbrances388,000

Encumbrances388,000

Jefferson County

Debt service fund closing entries

December 31, 2015

Account Title Debits Credits

OFS - transfers in65,800

Expenditures - bond principal22,000

Expenditures - bond interest21,000

Fund balance 22,800

Jefferson County

Permanent Fund Closing Entries

December 31, 2015

Account Title Debits Credits

Revenues - investment income - interest18,700

Revenues - net increase in fair value of investments2,400

Expenditures - Library12,700

Fund Balance8,400

5-13 (d)

Jefferson County Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balances

For the year ended 12-31-2015 General Fund Capital Projects FundDebt Service FundPermanent FundTotal Governmental Funds

Revenues

Property Taxes $ 262,075 $ - $ - $ - $ 262,075

Intergovernmental revenues 280,000 280,000

Investment income:

Interest income 18,700 18,700

Net increase in fair value of investments 2,400 2,400

Total Revenues 262,075 280,000 - 21,100 563,175

Expenditures

Current:

General Government Operations 181,560 181,560

Library 12,700 12,700

Capital Outlay 39,900 612,000 - 651,900

Debt Service -

Principal 22,000 22,000

Interest 21,000 21,000

Total Expenditures 221,460 612,000 43,000 12,700 889,160

Excess (Deficiency) of Revenues Over Expenditures 40,615 (332,000) (43,000) 8,400 (325,985)

Other financing sources (uses)

Proceeds of bonds 700,000 700,000

Premium on bonds 22,800 22,800

Transfers in 65,800 65,800

Transfers out (38,500) (22,800) (61,300)

total other financing sources (uses) (38,500) 700,000 65,800 - 727,300

Net Change in Fund Balance 2,115 368,000 22,800 8,400 401,315

Fund Balance, January 1 156,758 68,000 - 500,000 724,758

Fund Balance, December 31 $ 158,873 $ 436,000 $ 22,800 $ 508,400 $ 1,126,073

5-13 (e)

Jefferson County Governmental Funds

Balance Sheet

As of 12-31-2015 General Fund Capital Projects FundDebt Service FundPermanent FundTotal Governmental Funds

Assets

Cash $ 132,648 $ 181,000 $ 22,800 $ 8,400 $ 344,848

Investment in corporate bonds 373,000 373,000

Investment in US securities 129,400 129,400

Taxes Receivable - net 51,325 51,325

Due from other governments 280,000 280,000

Accrued interest receivable 1,700 1,700

Supplies Inventory 350 350

Total Assets $ 184,323 $ 461,000 $ 22,800 $ 512,500 $ 1,180,623

Liabilities, Deferred Inflows and Fund Balances

Liabilities

Accounts Payable 2,000 4,100 6,100

Wages Payable 850 850

Contracts payable 25,000 25,000

Total Liabilities 2,850 25,000 - 4,100 31,950

Deferred Inflows of Resources

- Property Taxes 22,600 22,600

Fund Balances

Nonspendable

Inventories 350 350

Permanent Fund principal 500,000 500,000

Restricted for low income housing projects 436,000 436,000

Assigned -

General Government operations 800 - 800

Debt Service 22,800 22,800

Library purchases 8,400 8,400

Unassigned 157,723 157,723

Total Fund Balances 158,873 436,000 22,800 508,400 1,126,073

Total Liabilities and Fund Balances $ 184,323 $ 461,000 $ 22,800 $ 512,500 $ 1,180,623

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