1. The City of Santangelo received a $500,000 federal grant to acquire several buses to be used in its public transit system. The city paid $400,000 to acquire several buses. At year-end, $100,000 of the grant had not yet been used. During the year total depreciation on the buses was $40,000. Revenues for the public system were $600,000; operating expenses (other than depreciation) were $470,000. REQUIRED: Assuming the Public Transit Enterprise Fund began the year with unrestricted net assets of $420,000, prepare the following for the Public Transit Enterprise Fund.
a) Statement of revenues, expenses, and changes in net position.
b) Net position section of the statement of net position.
2. Falmouth City owns and operates a mini-bus system which it accounts for in an enterprise fund. Prepare journal entries to record the following transactions, which occurred in a recent year.
a) The mini-bus system issued $5 million of 8 percent revenue bonds at par and used the proceeds to acquire new mini-buses.
b) As required by the bond covenant, the system set aside 1 percent of the gross bond proceeds for repair contingencies.
c) The system accrued 6 months interest on the revenue bonds at year-end.
d) The system incurred $30,000 of repair costs and paid for them with cash set aside for repair contingencies.
3. Wilmer County provides a defined benefit pension plan for its employees. The county accounts for the pension plan in a pension trust fund, which is included in the county's basic financial statements. In the years indicated, the county engaged in the following transactions related to the pension trust fund. Prepare all necessary journal entries. Clearly indicate the fund in which the entry is being made. If no entry is needed, please write "No entry required."
a) In Year 1, the pension trust fund sent billings to the general fund and the City Utility (enterprise) Fund for the actuarially determined amount of required contributions. The general fund was billed $300,000 but paid only $220,000 during the year. The enterprise fund was billed $450,000 and paid $530,000.
b) In Year 2, the pension trust fund sent billings to the general fund and the City Utility Fund for the actuarially determined amount of required contributions. The general fund was billed $320,000 and paid the entire amount plus $30,000 of last year's underpayment. The enterprise fund was billed $480,000 and paid only $380,000.
4. The Heritage Art Museum, a not-for-profit entity specializing in art items created by natives of the Pacific Northwest, has a December 31 fiscal year-end. The museum has a policy of NOT capitalizing collection items. Your entries should clearly indicate the fund in which the entry is made or to which class of net assets the account would be closed. If no entry is required, write “No entry required.”
a. During the current year the museum received admissions fees of $500,000 in cash.
b. Citizens of the local community are encouraged to participate in a program called “Friends of the Museum.” For a yearly contribution of $25 per family, a family is entitled to free admission to the museum during the calendar year. A “friend of the museum” also receives a monthly one-page newsletter announcing upcoming events. At year-end, there were 1,000 members in “Friends of the Museum.”
c. During the current year the museum incurred salaries expense of $1 million of which $40,000 remains unpaid at year-end.
d. During the year the museum incurred operating expenses of $450,000 of which $30,000 remains unpaid at year-end. Of the $450,000, $50,000 was used to buy supplies and $20,000 of supplies remain on hand at year-end.
e. Office equipment owned by the museum has a historical cost of $140,000 and a salvage value of $20,000 and is being depreciated over 8 years on the straight-line basis.
f. During the year the museum conducted a fund-raising drive to raise money to acquire new art items for the museum. The museum received pledges of $200,000 of which the museum had collected $160,000 by year-end and expected to ultimately collect another $20,000.
g. The museum had a small portfolio of investments in equity securities.. At the beginning of the year the portfolio had a fair value of $60,000. During the year the Museum collected $3,000 in dividends on the securities. At year-end the portfolio had a market value of $62,000.
h. During the year a citizen died and willed his wonderful collection of native art to the museum. The appraised value of the collection was $600,000.
i. To balance its collection, the museum sold two of its collection items for $250,000, which approximates fair value. These items had a historical cost to the museum of $10,000.
j. The proceeds of the sale and additional cash were used to acquire two new items at a cost of $310,000.
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Answer to Question No- 1a
Public Transit Enterprise Fund
Statement of Revenue, Expenses and changes in Fund Net Position
For the period …………….
Particulars Amount ($)
Income from Public system 600.000,00
Total operating revenues (A) 600.000,00
Depreciation/ Amortization/Depletion 40.000,00
Other operating expenses 470.000,00
Total operating expenses (B) 510.000,00...
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