Trust Activities and Fund Issues

Exercise 1

A concerned citizen provides resources and establishes a trust with the local government. What factors should be considered in determining which fund to report the trust activities?

Exercise 2

The citizen of Spencer County approved the issuance of $ 2,000,000 in 6% general obligation bonds to finance the construction of a courthouse annex. A capital project fund was established for that purpose. The preclosing trial balance of the courthouse annex capital project fund follows:

Trial Balance-December 31, 2015

                                          Debits            Credits

Cash                                    $900,000
Contract payable                                       $550,000
Due from State Government   200,000
Encumbrances                       85,000
Expenditures-Capital              1,850,000
Intergovernmental grant                              400,000
OFS: premium on bonds                              45,000
OFS: proceeds sale of bonds                        2,000,000
Budgetary fund balance-
Reserve for encumbrances                           85,000
Transfer out                          45,000
                                            $3,080,000    $3,080,000

REQUIRED:

a. Prepare any closing entries necessary at year-end.

b. Prepare a Statement of Revenues, Expenditure, and Changes in Fund Balance for the courthouse annex capital project fund.

c. Prepare a balance sheet for the Courthouse Annex Capital Project Fund, assuming all unexpended resources are restricted to construction of the courthouse annex.