adv accounting unit 10

For this assignment, use your Fundamentals of Advanced Accounting text to complete the following:

· Problem 34 on page 621. For this problem you will apply your knowledge of the journal entries necessary to create and maintain a governmental unit.

The County of Maxnell decides to create a sanitation department and offer its services to the public for a fee. As a result, county officials plan to account for this activity within the enterprise funds. Prepare journal entries for this operation for the following 2017 transactions as well as necessary adjusting entries at the end of the year. Assume the information is being gathered to prepare fund financial statements. Only entries for the sanitation department are required here:

January 1—Received unrestricted funds of $160,000 from the general fund as permanent financing.

February 1—Borrowed an additional $130,000 from a local bank at a 12 percent annual interest rate.

March 1—Ordered a truck at an expected cost of $108,000.

April 1—Received the truck and made full payment. The actual cost amounted to $110,000. The truck has a 10-year life and no salvage value. Straight-line depreciation is to be used.

May 1—Received a $20,000 cash grant from the state to help supplement the pay of the sanitation workers. The money must be used for that purpose.

June 1—Rented a garage for the truck at a cost of $1,000 per month and paid 12 months of rent in advance.

July 1—Charged citizens $13,000 for services. Of this amount, $11,000 has been collected.

August 1—Made a $10,000 cash payment on the 12 percent note of February 1. This payment covers both interest and principal.

September 1—Paid salaries of $18,000 using the grant received on May 1.

October 1—Paid truck maintenance costs of $1,000.

November 1—Paid additional salaries of $10,000, first using the rest of the grant money received May 1.

December 31—Sent invoices totaling $19,000 to customers for services over the past six months. Collected $3,000 cash immediately.

December 31—A new landfill was opened this year. It is 12 percent filled as of the end of the year. The estimated current cost for the eventual closure of this facility is $4 million although no payments will be made for approximately 9 years.

For this assignment, use your Fundamentals of Advanced Accounting text to complete the following:

· Problem 39 on page 625. For this final assignment, apply your knowledge of the many operational issues facing a city government using governmental accounting procedures.

For each of the following, indicate whether the statement is true or false and include a brief explanation for your answer.

a. A pension trust fund appears in the government-wide financial statements but not in the fund financial statements.

b. Permanent funds are included as one of the governmental funds.

c. A fire department placed orders of $20,000 for equipment. The equipment is received but at a cost of $20,800. In compliance with requirements for fund financial statements, an encumbrance of $20,000 was recorded when the order was placed, and an expenditure of $20,800 was recorded when the order was received.

d. The government reported a landfill as an enterprise fund. At the end of Year 1, the government estimated that the landfill will cost $800,000 to clean up when it is eventually full. Currently, it is 12 percent filled. At the end of Year 2, the estimation was changed to $860,000 when it was 20 percent filled. No payments are due for several years. Fund financial statements for Year 2 should report a $76,000 expense.

e. A city reports a landfill in the general fund. At the end of Year 1, the government anticipated the landfill would cost $900,000 to clean up when it is full and reported that it was 11 percent filled. At the end of Year 2, the estimates were changed to $850,000 and 20 percent filled. No payments are due for several years. Government-wide financial statements for Year 2 should report a $71,000 expense.

f. An agency fund has neither revenues nor expenditures but reports expenses.