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Assignment Question(s):(Marks. 10)

1.These transactions relate to Metro Bus, which provides transportationservices to residents of Parker County. Metro Bus is accounted for as aCounty Enterprise Fund. Make journal entries to account for thefollowing 2013 transactions in the Enterprise Fund.

a.On April 1,2013, Metro borrows $3,000,000 by issuing 10-year revenue bonds. Bondprincipal is to be paid back in 20 equal semi-annual installments,starting October 1, 2013, together with interest of 6% a year on theunpaid principal.

b.On July 1, Metro pays cash for 10 busescosting $150,000 each. Metro also pays cash for land costing $100,000and a building costing $900,000 to house its repair activity.

c.On July 1, Metro invests $200,000 of unused cash in a Certificate of Deposit (CD).

d.Metro pays cash of $50,000 to acquire an inventory of repair parts.

e.Metro collects bus fares of $900,000, which it deposits in the bank.

f.Metrosends an invoice for $10,000 to the County Social Services Agency fortaking senior citizens on bus tours. The Agency receives appropriationsfrom the General Fund.

g.Metro pays salaries of $500,000 to its bus operators, mechanics, and administrative staff.

h.The CD (transaction c.) matures and Metro receives a check for $203,000.

i.On October 1, 2013, Metro pays the first installment of principal and interest on the revenue bonds in transaction a.

To prepare financial statements at December 31, 2013, Metro makes adjusting journal entries for the following items:

j.Torecord six months’ depreciation on the buses and building bought intransaction b. Estimated lives are: buses – 10 years; building – 30years.

k.To record consumption of repair parts. A year-endphysical inventory shows repair parts on hand amounting to $8,000. (Seetransaction d.)

l.To accrue for unpaid salaries of $12,000.

m.To accrue interest on the revenue bonds outstanding at December 31, 2013. (See transactions a. and i.)

2. Explain Financial Reporting Objectives of federal government

3.Malaz Township decides to construct a new city hall. Based on thefollowing data, prepare a statement of revenues, expenditures, andchanges in fund balance for Malaz Township’s Capital Projects Fund. Alltransactions occur within the calendar year 2013.

a.The Fund starts and ends the year with a zero fund balance.

b.TheFund’s financing sources for the city hall project were: long-term bondproceeds – $6 million; operating transfer from the General Fund – $2million; state grant – $1.5 million; interest from the temporaryinvestment of cash – $90,000.

c.Total outlays for constructingthe new city hall were: construction costs – $8,250,000; design andconstruction supervision fees – $600,000.

d.City laws requirethat, whenever bonds are used, any remaining difference between totalfinancing sources and construction costs must be transferred to the DebtService Fund.Therefore, $740,000 was transferred to the Debt ServiceFund.

Answer

Q4.The following data comes from the 2013 financial statements of theVillage of Matthews. Although presented in summarized format, thebalance sheet debits and credits are equal and the operating statementinformation is complete.

General Fund – Balance Sheet Elements

Cash$1,200,000

Short-term investments405,000

Property taxes receivable – delinquent282,000

Due from other funds58,000

Accounts payable and other accrued liabilities900,000

Assigned fund balance 90,000

Unassigned fund balance935,000

General Fund – Operating Statement Elements

Revenues, including property taxes of $6,125,000$8,350,000

Expenditures (total)7,510,000

Transfer to Debt Service Fund400,000

Excess of revenues and other sources over expenditures

and other uses440,000

Debt Service Fund – Balance Sheet Elements

Cash and cash equivalents230,000

Restricted fund balance230,000

Debt Service Fund – Operating Statement Elements

Debt service expenditures:

Principal100,000

Interest200,000

Operating transfer from General Fund400,000

Excess of revenues and other sources over

expenditures and other uses100,000

Required: Calculate the following ratios for the Village of Matthews:

a.Current ratio – General Fund

b.Quick ratio – General Fund

c.Property tax receivable delinquency rate

d.Budgetary cushion for the General Fund (Assume all assigned fund balance is available.)

e.Debt service burden

f.Excessof revenues and other sources over expenditures and other uses, as apercentage of revenues – Combined, General Fund and Debt Service Fund(Hint: The transfers out and in cancel each other. Therefore, use therevenues for the denominator.)

Answer: