QUESTION 1: Budgetary accounting The events and transactions listed below took place in the General Fund of Berryville

during fiscal 2008. Prepare the necessary general journal entries. 1. The annual budget was originally adopted as follows: Estimated Revenues Property taxes $1,600,000 Fines and forfeits 150,000 Intergovernmental 475,000 $2,225,000 Appropriations General government Public Safety Streets

$ 210,000 1,580,000 395,000 $2,185,000

2.

Purchase orders were issued for goods and services with the following estimated costs: General government Public Safety Streets $ 210,000 1,450,000 395,000

3.

Revenues were received in cash as follows: Property taxes Fines and forfeits Intergovernmental $ 855,000 117,000 295,000 $1,267,000

4.

Items on order were received with these costs (cash paid): Estimated Actual General government $ 165,000 $ 163,500 Public Safety 719,000 720,100 Streets 135,000 134,000 $1,019,000 $1,017,600 The Berryville city council directed that $120,000 of the Public Safety appropriation be reappropriated to the Streets function in a budgetary interchange.

5.

6.

Additional revenues were received in cash as follows:

Property taxes Fines and forfeits Intergovernmental

$742,000 37,000 181,000 $960,000

7.

Items on order were received with these costs (cash paid): Estimated Actual General government $ 45,000 $ 45,000 Public Safety 693,700 691,250 Streets 234,800 235,350 $973,500 $971,600

QUESTION 2: REVENUE REPORTING

Catlett County reported the following transactions during its fiscal year ended December 31, 2006: On February 16, 2006, the County purchased a 15 year $100,000 bond for $99,800 with cash held in a debt sinking fund. During the year, the County received $5,000 in interest. At year-end, the market value of the bond was $99,950. In December 2005, the Kiplinger Foundation pledged up to $3 million to support the Countys Art Museum. The Foundation will contribute $1 for every $2 in admissions revenue generated by the Art Museum. During 2006, the Art Museum reported $3.0 million in admissions revenue. During January and February 2007, it reported an additional $1.0 million. The County received the matching contributions for both admissions amounts. During the year, the County agreed to impose a license fee on all tanning salons operated in the County. Licenses cover the period July 1, 2006 to June 30, 2007. The County received license revenues of $200,000. The County sold 2 police cars for salvage totaling $7,500. It had purchased the cars 5 years earlier at $30,000 each. The County had fully depreciated the police cars in its government-wide financial statements, and a total salvage value of $5,000 had been anticipated. The County received a $2.5 million grant from the state to reimburse the cost of its DARE program. The County incurred DARE program costs of $2.0 million during 2006 and an additional $.5 million in January and February 2007. Match the items below with the amounts that follow. All amounts are for the year ended December 31, 2006. An amount may be selected once, more than once, or never. a. Amount of investment income (interest, dividends, realized and unrealized gains and losses) recognized by the County in its debt service fund. b. Amount of investment income (interest, dividends, realized and unrealized gains and losses) recognized by the County in its government-wide financial statements. c. Amount recognized in the Countys general fund on the sale of its police cars. d. Gain/loss recognized on the sale of police cars in the Countys government-wide financial statements. e. DARE grant revenues recognized in the Countys government-wide financial statements. f. DARE grant revenues recognized in the Countys special revenue fund. g. Contributions from the Kiplinger Foundation in the Countys Museum Fund (a special revenue fund). h. Contributions from the Kiplinger Foundation reported in the Countys government-wide financial statements. i. License fee revenue reported in the Countys general fund. j. License fee revenue reported in the Countys government-wide financial statements. k. Reported value at 12/31/2006 of the Countys investment. 1. 2. 3. 4. $0 $5,150 $5,000 $200,000 10. 11. 12. 13. $99,950 $99,800 $2,500,000 $7,500

5. 6. 7. 8. 9. QUESTION 3:

$1,500,000 $2,000,000 $3,000,000 $500,000 $100,000

14. $2,500

A State has the following transactions during its fiscal year ending June 30, 2007. The State defines available as within 60 days of year-end. REQUIRED: Prepare journal entries to record each of these transactions in the States General Fund. Comment on how each of these transactions would be different when reported in the States government-wide financial statements. This means to state if the effect is the same, or if different how it would be reported in the governmentwide statements. a. The State issues $50 million of 30-year debt to finance renovations to its capitol building. Due to changes in interest rates, the State receives only $49.2 million in cash. b. The State workers earn $45 million in wages during the year. However, in an effort to balance its budget, the State defers payment of $2 million in wages until July 5, 2007. c. Required contributions for pension benefits for 2007 are $7 million, which the state transfers to its pension trust fund. d. The State makes grants of $5.5 million based on a formula to school districts within its boundaries. The schools must use these grants to finance operating expenditures incurred during the current fiscal year. e. The State agrees to share $6.0 million of its 2007 sales (derived tax) revenues with all towns within its boundaries based on a formula established by the legislature. The resources must be used by the towns during the states next fiscal year (2008). f. The state makes interest and principal payments on its bonded debt during the period of $17.0 million.