Chapter - Fiduciary Funds

Part 1. Private Purpose Trust Fund Transactions

The City of Monroe Scholarship Foundation private-purpose trust fund had the following account balances on January 1, 2017:

Required:

a. Open a general journal for the City of Monroe Community Foundation Trust Fund and record the following transactions for the year ending December 31, 2017:

(1) On May 1, the first semiannual interest payment was received on the corporate bonds. The bonds pay 6 percent annual interest, semiannually on May 1 and November 1.

(2) During the first half of the year, additional contributions from individuals and foundations amounted to $205,500, in cash. From these funds, $ 200,000 were invested in RST Corporation stock on June 15.

(3) On November 1, the second semiannual interest payment was received from the investment in bonds.

(4) On November 15, a dividend was declared by RST Corporation in the amount of $2,000 and was received in cash.

(5) On December 1, RST Corporation stock was sold for $204,000 cash. Those funds were immediately invested in UVW Corporation stock.

(6) On December 15, cash scholarships in the amount of $48,000 were made to various college students.

(7) On December 31, an accrual was made for year-end interest on the corporate bonds.

(8) Also, on December 31, it was determined that the market value of the corporate bonds, exclusive of accrued interest, was $ 752,100 and that the market value of UVW Company stock was $ 199,000.

b. Post the entries to the Community Foundation Trust ledger (t-accounts).

c. Prepare and post an entry closing all nominal accounts to Net position.

Part 2. Pension Trust Fund Transactions

The City of Monroe Police Department pension plan, a single-employer, defined-benefit plan, reported the following account balances as of January 1, 2017:

Required:
a. Open a general journal for the City of Monroe Police Department Pension Trust Fund and record the following transactions for the year ending December 31, 2017:
(1) Member contributions were received in the amount of $400,000. The City General Fund contributed the same amount.
(2) Interest was received in the amount of $212,000, including the accrued interest receivable at the beginning of the year. The interest accrual at year end amounted to $86,000.
(3) During the year, common stock dividends amounted to $125,000.
(4) Investments were made during the year in common stock in the amount of $650,000.
(5) Annuity benefits in the amount of $325,400, disability benefits of $ 82,020 and refunds to nonvested terminated employees of $39,800 were recorded as liabilities.
(6) Accounts payable, in the amount of $460,700, were paid in cash.
(7) During the year, common stock valued at $505,000 was sold for $506,800. A portion of these funds, $500,000 were invested in common stock of a different company.
(8) At year-end, the market value of investments in bonds increased by $7,750; the market value of investments in stocks decreased by $3,250.

b. Post the entries to the Police Department Pension Trust ledger (t-accounts).

c. Prepare and post an entry closing all nominal accounts to Net position.

Part 3. Fiduciary Fund Financial Statements

Required: Using the balances from Parts 1 and 2 prepare the following:

1. Statement of Changes in Fiduciary Net position.

2. Statement of Fiduciary Net position

Chapter - Government-wide Statements

Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances from Section 5-C; (3) the proprietary funds Statement of Net position and Statement of Revenues, Expenses, and Changes in Fund Net position from Section 6-C.

Required:
1. Start a worksheet for adjustments, using the trial balance format illustrated in the text (i.e. list accounts with debit balances first, then accounts with credit balances). Enter the balances from the governmental funds financial statements prepared for Section 5-C. When doing this, follow the following guidelines:

Net position: Use a single account for net position (which will include the beginning balance of all fund balance accounts).

Intergovernmental Revenues: When setting up the worksheet, set up separate lines for the intergovernmental revenues as follows:

State Grant for Highway and Street Maintenance $ 1,065,000
Operational Grant-General Government 332,000
Capital Grant-Public Safety 1,340,000
total $2,737,000

Capital Assets: It is not necessary to set up separate lines for different classes of capital (fixed) assets or accumulated depreciation (simply use one row for Capital Assets and another for Accumulated Depreciation).

Confirm that the total debits and credits equal.

2. Prepare worksheet entries and post to the worksheet for the following items. Identify each adjustment by the letter used in the problem:

a. Record the January 1, 2017 balances of general fixed assets and related accumulated depreciation accounts. The City of Monroe had the following balances (excluding Internal Service Funds):

Cost Accumulated Depreciation
Totals $ 64,200,000 28,700,000

b. Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances.
c. Depreciation expense (governmental activities) for the year totaled $ 4,900,000.
d. Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium.
e. As of January 1, 2017, the City of Monroe had $12,000,000 in general obligation bonds outstanding.
f. Eliminate the expenditures for bond principal.
g. Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2017. The computation is as follows: ($11,200,000 × .03 × 6/12) + ($4,000,000 ×. 08 × 6/12) = $328,000).
h. Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2017 fund basis statements, ($12,000,000 × .03 × 6/12) = $180,000.
i. Amortize bond premium in the amount of $ 10,000.
j. Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes.
k. Adjust for the $21,000 of property taxes that was deferred in 2016 and recognized as revenue in the 2017 fund-basis statements.
l. Assume the City adopted a policy in 2017 of allowing employees to accumulate compensated absences. Make an adjustment accruing the expense of $ 42,000 Charge compensated absences expense.
m. Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries).
n. No revenues from internal service funds were with external parties. Assume $3,200 of the $11,200 "Due from Other Funds" in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $3,200 interfund receivables.
o. Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount.
p. Eliminate transfers that are between departments reported within governmental activities.

3. Prepare, in good form, a Statement of Activities for the City of Monroe for the Year Ended December 31, 2017. For purposes of this statement, assume:
 $ 332,000 in the General Fund is a state grant specifically to support general government programs.
 $ 1,065,000 in the Street and Highway Fund is an operating grant specifically for highway and street maintenance expenses.
 $ 1,340,000 in the City Jail Construction Fund is a capital grant that applies to public safety.

Use the balances computed from the worksheet completed in part 2 for the governmental activities portion of the statement. Use the solution to P6-C (Enterprise fund) to prepare the business activities portion (net any short-term interfund payables/receivables).

4. Prepare, in good form, a Statement of Net position for the City of Monroe as of December 31, 2017. Group all capital assets, net of depreciation. Include a breakdown in the Net position section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted. For purposes of classifying net position for the governmental activities, assume:
 For the governmental activities net position invested in capital assets, net of related debt, the related debt includes the bonds payable, the premium on bonds payable, and the advance from the water utility fund.
 The special revenue fund resources are restricted by the granting agency for street and highway maintenance. Assume $204,500 are the only restricted resources in the governmental activities.

5. Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position in the government-wide Statement of Net position.

6. Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position in the government-wide Statement of Activities.

Chapter - Financial Statement Analysis

Assemble the financial statements prepared for the City of Monroe. These financial statements will be in the solutions to Exercises 5-C, 6-C, 7-C, and 8-C. Assume a population of 30,000 and fair value of property in the amount of $350 million. Compute the following ratios, following the guidance used for the Village of Elizabeth in this chapter:

(1) Financial Position - Governmental Activities
(2) Financial Position - General Fund.
(3) Quick Ration - Governmental Activities
(4) Leverage - Primary Government
(5) Debt Coverage - Enterprise Funds
(6) Debt Service to Total Expenditures
(7) Debt per Capital - Primary Government
(8) Debt to Assessed Value of Property - Primary Government

10 - 11 The Blair Museum Association, a nonprofit organization, had the following transactions for the year ended December 31 2017

1. Cash contributions to the Association for the year included (a) unrestricted, $970,000; (b) restricted for traveling displays, $250,000; (c) restricted by the donor for endowment purposes, $1,400,000: and (d) restricted by the donor for museum security equipment, $4150,000.

2. Additional unrestricted cash receipts included (a) admission charges. $365,000; (b) interest income, $210,000; and (c) tuition for museum school, $70,000.

3. Donors made pledges in 2017 in a pledge drive specifically for funds to be used in 2018. The amount was $400,000.

4. A multiyear pledge (temporarily restricted) was made at the end of the year by a private foundation. The foundation pledged $50,000 per year for the next five years (at the end of each year). The present Value (rounded) of those future payments is $211,000, using a 6 Percent discount rate.

5. Expenses associated with the as traveling display program amounted to $230,000 and were paid in cash before year-end.

6. The Museum collected pledges receivable from the previous year of $135,000. Although not restricted in purpose, the revenue (last year) had been classified as time restricted because collection was not scheduled until 2017.

7. The Museum purchased security equipment for $575,000 (cash). DIP Museum Association records all equipment in the unrestricted class or net assets.

8. In addition to the amount expended in transaction 5, expense (paid in cash) amounted to (a) museum displays, $1,300,000; (b) school, $85,000; (c) management and general, $350,060; (d) fund-raising, $250,000; and (e) membership development, $145,000.

9. Depreciation on museum fixed assets amounted to: (a) $40,000 for museum displays, (b) $7,000 for museum school, (c) $12,000 for management and general, (d) $4,000 for fund-raising, and (e) $4,000 for membership development.

Required:

a. Prepare journal entries to record these transactions, including closing entries. Prepare a Statement of Activities for the Blair Museum Association for the year ended December 31, 2017. Use the format in the text. The beginning net asset balances were unrestricted, $412,000; temporarily (time) restricted, $150,000; and permanently restricted, $3,500,000.

b. The Museum School program expenses are substantially larger than its revenues. Do you recommend that the program be discontinued?

Attachment:- Template.rar