Chapter 10 Homework

Exercise 10-2

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total +225,000 Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total +225,000 Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total +225,000 +75,000 Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total +225,000 +75,000 Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Sold building with a book value of $150,000 for $225,000 (proceeds Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net assets of a proprietary fund and on each net asset component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in net assets of a proprietary fund. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted). $225,000 - $150,000 = $75,000 gain Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total +225,000 +75,000 - 150,000 +75,000 Cash…$225,000 Asset…..$150,000 (book-all we know) Gain……$ 75,000

Land costing $500,000 was purchased by issuing a 5-year, 8% note for $450,000. The balance was paid from cash restricted for an expansion project. Land……..$500,000 N/P……………$450,000 Cash reserved for expansion….. $ 50,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total

Land costing $500,000 was purchased by issuing a 5-year, 8% note for $450,000. The balance was paid from cash restricted for an expansion project. Capital Assets Acc/Dep Debt related to capital assets expended. Land……..$500,000 N/P……………$450,000 Cash reserved for expansion….. $ 50,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 2 NONE NONE ($50,000) +$50,000 NONE what happened to the capital asset land and the long-term note/p? Land of $500,000 capital debt $450,000 (proceeds expended already) --------------------------- $50,000

3. Depreciation expense for the year was $200,000. Capital Assets Acc/Dep Debt related to capital assets expended. Depreciation Expense….$200,000 Accumulated Depreciation……$200,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 3 ($200,000) NONE NONE ($200,000) ($200,000)

Interest expense of $36,000 on the note in transaction 2 was paid from unrestricted resources. Interest expense……… $36,000 Unrestricted Cash……….$36,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 4 ($36,000) ($36,000) NONE NONE ($36,000)

Bonds payable of $200,000 were repaid with restricted resources along with $50,000 of interest. The bonds were issued several years earlier to finance capital asset construction. because there is less capital debt. Bonds payable……..$200,000 Interest expense….. $50,000 Cash………………$250,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 5 ($50,000) ($250,000) NONE $+200,000 ($50,000) it doesn’t say it came from restricted

A capital grant of $500,000 was received, but no qualifying costs have been incurred. Cash……….$500,000 Deferred capital grant……… $500,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 6 NONE NONE NONE NONE NONE Cash restricted $500,000 - Related capital debt $500,000 ----------------------------------------- -0-

$300,000 of the restricted capital grant from transaction 6 was expended for its intended purpose. Asset………$300,000 (because its capital grant) Cash-Restricted………$300,000 Deferred Capital Grant…$300,000 Revenue-Capital Contributions…..$300,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 7 +$300,000 NONE NONE +$300,000 +$300,000 - cash $300,000 + def cap/grt $300,000 ----------------------- -0-

8. Sales revenues amounted to $1,000,000. Cash……….$1,000,000 Sales………$1,000,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 8 +$1,000,000 +$1,000,000 NONE NONE +$1,000,000

Interest revenues restricted to the use of the Enterprise Fund $40,000 were received. Cash restricted….. $40,000 Interest revenue………$40,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 9 +$40,000 +$40,000 its restricted to the Enterprise Fund but anything within the enterprise fun can use it (thus its unrestricted within the fund). pg. 391 In govt-wide these assets would be restricted because there the Enterprise fund is merged with other funds.

The cost of materials and supplies used for the year was $75,000. Supplies expense…….$75,000 Supplies…………..$75,000 Net Assets Affect Invested Transaction Operating Unrestricted Restricted in Capital Number Statement? Assets Total 10 ($75,000) ($75,000) NONE NONE ($75,000)

Exercise 10-3

Refunding Bonds Payable..................$8,000,000 Prepare the journal entries needed in an Enterprise Fund to record the following transactions. Include any adjusting entries required. Issued REFUNDING BONDS at par, $8,000,000. The bonds bear interest at 8% payable annually and mature in 5 years. (Ignore bond issue costs). Cash.................... $8,000,000 Refunding Bonds Payable..................$8,000,000

Paid the $8,000,000 into an irrevocable trust to defease in substance the previously outstanding bonds payable of the Enterprise Fund. These old bonds have a par value of $7,200,000 and an unamortized discount of $100,000. The old bonds are scheduled to mature in 6 more years. Bonds payable............................$7,200,000 Deferred Interest Expense adj.. 900,000 Discount on Bonds payable................................$100,000 Cash....................................................................$8,000,000 Refunding bond...........$8,000,000 - Def Int Exp.................... $900,000 ------------------------------------------------------- NET amount of liability................. $7,100,000

Deferred Interest Expense............$180,000 3, The annual interest payment on the new bonds was made at year end when due. $8,000,000 x .08 = $640,000 interest in cash Interest Expense.............. $640,000 Cash...................................$640,000 ADJUSTMENT OF DEFERRED INTEREST. amortize over shorter of remaining term of old debt (6 years) or term of refunding issue (5 years). $900,000 / 5 = $180,000 Interest expense.........$180,000 Deferred Interest Expense............$180,000

E 10-5

Indicate the classification in which each of the following would be reported in a government proprietary fund cash flow statement. Use the following letters for each classification to respond: A: OPERATING activities. B: NONCAPITAL FINANCING activities. C: CAPITAL and RELATED FINANCING activities. D: INVESTING activities. E: NONE of the above

Cash paid to purchase investments with resources restricted for capital asset construction. D. INVESTING

C. CAPITAL and related financing. 2. Cash received from the sale of equipment. C. CAPITAL and related financing.

3. Cash paid for salaries. A. OPERATING

4. Cash received from interest on investments that are restricted for servicing bonds that had been issued to finance construction of a building. D. INVESTMENTS

C. CAPITAL and related financing. Cash paid for interest on refunding bonds that were issued for repayment of bonds that were issued to finance purchase of major pieces of equipment. C. CAPITAL and related financing.

B. NONCAPITAL financing. Cash transfer paid to General Fund (The General Fund budget requires these funds to be used to help finance acquisition of a fire truck). B. NONCAPITAL financing. The GF is using for capital purposes but to the enterprise fund it was just a misc transfer.

B. NONCAPITAL financing. 7. Cash received from operating grants. B. NONCAPITAL financing.

C. CAPITAL and related financing. Cash received from a transfer from the GF to finance expansion of the physical plant. C. CAPITAL and related financing.

C. CAPITAL and related financing. 9. Cash received from capital grants. C. CAPITAL and related financing.

B. NONCAPITAL FINANCING Cash paid for interest on a short-term note issued to fulfill a temporary need for operating funds. B. NONCAPITAL FINANCING Interest NEVER goes into operating in GNP.

E 10-7

Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 1. DEPRECIATION on capital grant financed capital assets. OPERATING EXPENSE

Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 2. Depreciation on INFRASTRUCTURE ASSETS. OPERATING EXPENSE WHAT IF THE MODIFIED APPROACH? Then depreciation is not done.

Last item before changes in NA Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 3. Transfers from other funds. Last item before changes in NA

Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 4. Cash proceeds of short-term note issuances. N/A

Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 5. Retirement of bonds payable of the fund. N/A

Last item before changes in NA Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 6. Routine annual transfers from other funds. Last item before changes in NA

Normally as NONOPERATING REVENUE Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 7. Gain on sale of capital assets. Normally as NONOPERATING REVENUE unless its considered a SPECIAL GAIN then with special items.

called DEFERRED INTEREST EXPENSE Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: 8. “Loss” on advance refunding of bonds. called DEFERRED INTEREST EXPENSE shows as contra liability on balance sheet

Operating grants are ALWAYS shown as NONOPERATING REV. Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: Restricted grants received that can be used for operations or for capital asset acquisition- assume 30% was expended during the year to acquire capital assets, 30% to cover operating expenses and 40% is not expended. Operating grants are ALWAYS shown as NONOPERATING REV. So 60% (operating and capital asset restrictions) are shown as non operating revenues because allowable costs met, the other 40% is shown as liability on the balance sheet (deferred revenue).

Explain or illustrate how the following items should be reported in a proprietary fund’s statement of revenues, expenses and changes in net assets: Entering into a capital lease with a capitalizable cost of $4,000,000 on the last day of the year- assume an initial payment on that day of $1,000,000. NO EFFECT on operating statement: Leased Asset $4,000,000 Capital Lease Obligation $4,000,000 Capital Lease Obligation... $1,000,000 Cash.................................$1,000,000

E 10-8

Airport Enterprise Fund Using the information provided below for the Airport Enterprise Fund of the City of Demere, prepare a statement of revenues, expenses and changes in net assets for 20X3. City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets

Airport Enterprise Fund CHARGES FOR SERVICES.............................. $3,500,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets

Airport Enterprise Fund SALARIES EXPENSE........................ $1,000,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000

CONTRACTURAL SERVICES USED........ $1,100,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000

Airport Enterprise Fund SUPPLIES USED................ $200,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 CONTRACTURAL SERVICES USED........ $1,100,000

DEPRECIATION EXPENSE.......... $1,500,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000

Airport Enterprise Fund INTEREST RECEIVED............$120,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000

INCREASE IN FV OF INVESTMENTS.......... $23,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$120,000

Loss on sale of CAPITAL ASSETS........... $4,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000

Airport Enterprise Fund TRANSFERS from the GF............ $222,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000

Capital assets donated for enterprise fund use.........$500,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000 TRANSFERS from the GF............ $222,000

Airport Enterprise Fund Interest expense............. $450,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000 Capital assets donated for enterprise fund use.........$500,000 TRANSFERS from the GF............ $222,000

Airport Enterprise Fund Amortization of deferred interest expense adjustment with credit bal.... $25,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000 Interest expense............. $450,000 Capital assets donated for enterprise fund use.........$500,000 TRANSFERS from the GF............ $222,000

Airport Enterprise Fund Expenditures that qualify (100% reimbursable) under capital grant... $1,300,000 City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 LOOKING FOR RECOGNITION OF THE REVENUE RELATED TO ALLOWABLE COSTS SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000 Interest expense............. $450,000 – 25,000 = $425,000 Capital assets donated for enterprise fund use.........$500,000 TRANSFERS from the GF............ $222,000 assumption is probably that contractural services of $1.1M and supplies used of $200K are the qualifying expenditures (they aren’t new ones).

Airport Enterprise Fund City of Demere Airport Enterprise Fund Statement of Revenue, Expenses and Changes in Net Assets For the Year Ended 20X3 Operating Revenue: Operating Expenses: Operating Income Nonoperating Revenues (Expenses) Income before Other Revenues, Expenses and Transfers Change in Net Assets CHARGES FOR SERVICES.............................. $3,500,000 SALARIES EXPENSE........................ $1,000,000 SUPPLIES USED................ $200,000 CONTRACTURAL SERVICES USED........ $1,100,000 DEPRECIATION EXPENSE.......... $1,500,000 Investment Income............$143,000 Loss on sale of CAPITAL ASSETS........... $4,000 Interest expense............. $450,000 – 25,000 = $425,000 Capital assets donated for enterprise fund use.........$500,000. OTHER REV + $1,300,000 = $1,800,000 TRANSFERS from the GF............ $222,000

Operating Revenues: Charges for services.................................................. $3,500,000 Operating expenses: Salaries............................................... $1,000,000 Contractural services........................ 1,100,000 Supplies.......................................... 200,000 Depreciation...................................... 1,500,000 3,800,000 ----------------- Operating Income (loss) (300,000) Nonoperating income (expense) Investment income....................... 143,000 Interest expense.......................... (425,000) Loss on sale of capital assets ( 4,000) ( 286,000) ---------------- Income (Loss) before other revenue, expenses and transfers ( 586,000) Capital contributions.................... 1,800,000 Transfer from GF...................... 222,000 Increase in NA....... 1,436,000 Net assets 1/1/03............................ 3,827,000 (given) Net Assets 12/31/03.............................. 5,263,000 ===========

P10-3

The city of Lynn operates its municipal airport The city of Lynn operates its municipal airport. The trial balance of the Airport Fund as of January 1, 20X0, was as follows: Cash…………………… $ 37,000 A/R…………………….. 50,000 Allowance for uncollectibles……………….. $ 2,000 Land…………………….. 200,000 Structures/Improvements 700,000 Acc Dep (Struct & Improv)………………… 50,000 Equipment…………… 250,000 Acc Dep (Equipment)…………………….. 90,000 Vouchers/p…………………………………. 48,000 Bonds payable…………………………….. 800,000 Net Assets………………………………….. 247,000 --------------- ------------------- $1,237,000 $1,237,000 ========= =========

Revenues collected in cash; - aviation revenues………… $340,500 - concession revenues….. $90,000 - revenues from airport mgt…………….. $30,000 - revenues from sales of petroleum products (net after deducting all costs of sales)…………………………. $10,500 The following transactions took place. Asks for a worksheet. Start out with JOURNAL ENTRIES $471,000 CASH............ $471,000 AVIATION REVENUES.......... $340,500 CONCESSION REVENUES.. 90,000 REVENUES FROM AIRPORT MANAGEMENT... 30,000 NET REVENUES FROM SALES OF PETROLEUM.... 10,500

Expenses, all paid in cash with the exception of $24,000, which remained unpaid at 12/31, were operating, $222,000; maintenance, $75,000; general and administrative, $73,000. Operating expenses........ $222,000 Maintenance expense... 75,000 G&A expense............. 73,000 Cash..................................... $346,000 Vouchers/p........................ 24,000

3. Bad debts written off during the year, $1900. Allowance for uncollectible accounts... $1900 Accounts Receivable............................$1900 The vouchers payable outstanding on January 1, 20X0, were paid. bal = $48,000. Vouchers payable........ $48,000 Cash......................................... $48,000

Bond principal paid during the year, $50,000, along with interest of $40,000. Bonds payable....... $50,000 Interest expense... 40,000 Cash.......................... $90,000 The remaining A/R outstanding on January 1, 20X0 were collected. bal = $50,000 - $1,900 (write off) = $48,100. Cash........ $48,100 A/R.............. $48,100

A/R on 12/31/X0 amounted to $30,000, all applicable to aviation revenues, of which $1,400 is estimated to be uncollectible. A/R.......... $30,000 Allowance for doubtful accounts......... $1,300 Aviation Revenues................................ 28,700 Allowance A/R 1900 w.o. 2000 beg bal 50,000 (beg) 1,900 w.o 100 30K 48,100 collected 1300 $0 $1,400 needs to get to 30K needs to get to

8. Accrued interest payable at the end of the year, $3000. Interest expense........ $3000 Interest payable........ $3,000 Depreciation charges: Structures & Improvements........ $14,000 Equipment..................... 21,000 Depreciation expense-S&I.... $14,000 Depreciation expense-EPT..... 21,000 Acc/Dep..........................................$14,000 Acc/Dep........................................... 21,000

allow for d/a equip unrestricted cash interest p 37,000 346,000 1900 2000 3000 UR 1300 471,000 (1) 48K 250K ICA 90K 48100 72,100 UR a/r land acc dep s&I acc dep e. 50K 1900 200K ICA 90K 50K 21K 30K 48100 14,000 111,000 ICA 28,600 NET of allowance UR 64,000 ICA vouchers/p bonds p S&I na 48K 48K 50K 800K 700K ICA 247,000 24K UR 750K ICA capital assets net to $975,000 net of acc dep

Compute the beginning and ending balances of the three NET ASSET components. INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT UNRESTRICTED RESTRICTED $72,100 Cash Land.... $200K + S&I 700K (50K) (14K) + EPT 250K (90K) (21K) ---------------------- $975,000 28,600 A/R Capital Assets $975,000 Vouchers/p (24,000) Interest/p (3,000) (750,000) *assume they are related to capital ast. Bonds payable $73,700 $225,000

Airport Enterprise Fund C. Prepare a statement of Net Assets as of 12/31/X0. City of Lynn Airport Enterprise Fund Balance Sheet 12/31/X0 ASSETS: Current Assets: Cash............. $72,100 A/R.............. $30,000 less: allowance (1,400) 28,600 $100,700 Capital Assets: Land.............. $200,000 Structures & I $700,000 Less: Acc/Dep (64,000) 636,000 Equipment 250,000 Less: Acc/Dep (111,000) 139,000 975,000 ------------- $1,075,700

Liabilities and Governmental Equity Current liabilities: Vouchers/p............... $24,000 Accrued int/p........ 3,000 $27,000 Bonds payable..... 750,000 $777,000 Net Assets: Invested in capital assets net of related debt....... $225,000 Unrestricted.... 73,700 $298,700 ------------------ $1,075,700

Airport Enterprise Fund Prepare a statement of revenues, expenses, and changes in net assets for the Airport Fund for the fiscal year ended 12/31/X0. City of Lynn Airport Enterprise Fund Operating Statement Fiscal year ended 12/31/X0 Revenues: Aviation ($370,500 - $1,300).... $369,200 Concession... 90,000 Airport management.... 30,000 Sales of petroleum (after deducting cost of sales)..... 10,500 $499,700 Expenses: Operating (various)........ $222,000 Maintenance.... 75,000 G&A..... 73,000 Dep- S&I... 14,000 Dep-Ept 21,000 $405,000

Operating Income....... $94,700 Non operating expenses: Interest expense........ $43,000 Changes in Net Assets.... $51,700 Net assets, January 1, 20X0 $247,000 Net assets, 12/31/X0..... $298,700

PROBLEM 10-6

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. Issued REFUNDING BONDS at par, $10,000,000. The interest rate is 10%, payable annually. Bonds mature in 10 years. Bond issue costs were $200,000. Cash............ $9,800,000 Unamortized Bond Issue Costs $200,000 Refunding Bonds Payable............. $10,000,000

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. Retired old debt with refunding proceeds of $9,800,000. Bonds payable outstanding (old).... $9,300,000 Unamortized premium on outstanding bonds................................................ $300,000 Unamortized bond issue costs on outstanding bonds............................. $ 50,000 * Remaining term of old debt, 4 years. B/P (Old)......................... $9,300,000 Unamortized Prem............ 300,000 Def Interest Exp Adj....... 250,000 Unamortized bond issue costs.......... $ 50,000 Cash..................................................... $9,800,000

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. Annual interest payment ($1,000,000) on new bonds was made at the due date which is year end. Interest expense............. $1,000,000 Cash....................................$1,000,000 Also need to do adjustments: Interest Expense...... $82,500 Unamortized Bond Issue Costs ($200,000/10)....... $20,000 Deferred Interest Expense Adjustment ($250,000/4 remain term of old bond is shortest).. $62,500

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. On April 30, 20X2, the Transit Authority leased 10 buses under a 6-year, non-cancelable capital lease. The capitalizable cost of the buses was $680,000, and an $80,000 down payment was made. The county does not receive title to the leased buses at the end of the lease term. Equipment under capital lease........ $680,000 Obligation under capital lease................. $600,000 Cash.......................................................... $ 80,000

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. Lease payments made during the fiscal year ended April 30, 20X3, totaled $130,262, including interest of $37,932. Interest expense............ $37,932 Obligation under capital lease.............................. $92,330 Cash....................................$130,262 also need to depreciate buses Depreciation expense..........$113,333 Accumulated Depreciation-Leased Equipment.... $113,333

Prepare journal entries, including adjusting entries needed, to record the following transactions for the Pickens County Transit Authority. Assume the fiscal year ends on April 30. The county estimates its probable losses from claims and judgments against the Transit Authority for events occurring in 20X2-20X3 at $227,000. However, only $85,000 of this is a current liability. Losses-C&J................ $227,000 Liability for C&J-Current...................$85,000 Liability for C&J-LT........................... $142,000