Continous Problem - City of Everlasting Sunshine

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Continuous Problem – City of Everlasting Sunshine

Continuous Problem – City of Everlasting Sunshine
TO ACCOMPANY

ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL AND NOT-FOR-PROFIT ORGANIZATIONS: TENTH EDITION Chapters 2 through 8 describe accounting and financial reporting by state and local governments. A continuous problem is presented to provide an overview of the reporting process, including preparation of fund basis and government-wide statements. The problem assumes the government is using fund accounting for its internal record-keeping and then at year-end makes necessary adjustments to prepare the government-wide statements. The problem that follows is presented in the same order as the textbook (beginning with Chapters 3, and 4). Each chapter requires the preparation of journal entries to record the events and transactions of governmental, proprietary, or fiduciary funds. For the General Fund, use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. For all other funds, use separate accounts for each type of revenue and expenditure/expense. At appropriate stages, preparation of the fund and government-wide statements are required. The following funds are included in this series of problems: Governmental Funds General Special revenue—Street and Highway Fund Capital projects—City Hall Annex Construction Fund Debt service—City Hall Annex Debt Service Fund Debt service—City Hall Debt Service Fund Proprietary Funds Internal service—Stores and Services Fund Enterprise—Water and Sewer Fund Fiduciary Funds Private-purpose—Student Scholarship Fund Pension trust—Fire and Police Retirement Fund

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Continuous Problem – City of Everlasting Sunshine

Chapter 3 – Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority & Chapter 4 – Accounting for the General and Special Revenue Funds The Balance Sheets of the General Fund and the Street and Highway Fund of the City of Everlasting Sunshine as of December 31, 2011, follow. These (beginning) balances have been entered in the proper general ledger accounts, as of 1/1/2012. CITY OF EVERLASTING SUNSHINE General Fund Balance Sheet As of December 31, 2011 Assets Cash Taxes receivable—delinquent Less: Estimated uncollectible delinquent taxes $80,000 $215,855 (37,333) 178,522 Interest and penalties receivable on taxes 21,586 Less: Estimated uncollectible interest and penalties (4,318) Due from state government Total assets Liabilities and Fund Equity Liabilities: Accounts payable Due to other funds Deferred revenues—property taxes Total liabilities Fund equity: Fund balance—assigned (for outstanding encumbrances) Fund balance—unassigned Total fund equity Total liabilities and fund equity 17,268 330,000 $605,790

$154,750 35,250 20,000 210,000

$31,000 364,790 395,790 $605,790

CITY OF EVERLASTING SUNSHINE Street and Highway Fund Balance Sheet As of December 31, 2011 Assets Cash Investments Due from state government $6,500 55,000 200,000

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Continuous Problem – City of Everlasting Sunshine Total assets Liabilities and Fund Equity Liabilities: Accounts payable Fund equity: Fund balance—assigned for streets and highways Total liabilities and fund equity $6,300 255,200 $261,500 $261,500

3–C. This portion of the continuous problem continues the General Fund and special revenue fund examples by requiring the recording and posting of the budgetary entries. To reduce clerical effort required for the solution use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. Subsidiary accounts are not required. Budget information for the City includes: a) As of January 1, 2012, the City Council approved and the mayor signed a budget calling for $10,700,000 in property tax and other revenue, $9,300,000 in appropriations for expenditures, and $1,280,000 to be transferred to two debt service funds for the payment of principal and interest. Record the budget for the General Fund and post to...
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