Tax Agency Funds - Government and Nonprofit Accounting - Solved Quiz, Exercises of Accounting

Download Tax Agency Funds - Government and Nonprofit Accounting - Solved Quiz and more Exercises Accounting in PDF only on Docsity! Tax Agency Funds-Terrell County collects taxes, both property taxes and other taxes, on behalf of three other governmental entities that are situated with the boundaries of the county: Terrell School District Terrell-Watson Park District Terrell Road Maintenance District Terrell County uses a fiduciary fund to account for the collection of the taxes. During the fiscal year ended June 30, 2003 the following transactions occurred. Prepare the journal entries, if needed, as requested in the form provided: #1. Terrell County determines that the full amount of the property taxes to be collected would be $1,500,000: Terrell School District $700,000 Terrell-Watson Park District $200,000 Terrell Road Maintenance District $100,000 # Accounts Debit Credit Taxes Rec. on behalf of others 1,500,000 Due to other governmental agencies 1,500,000 See page 479 bottom #2. During December, 2002, Terrell County Tax Collection Agency Fund collected $300,000 of the amount of the property taxes due and collected and additional $50,000 of use taxes (it like a sales tax). # Accounts Debit Credit Cash 300,000 Taxes Rec. on behalf of others 300,000 Cash 50,000 Due to other governmental entities 50,000 See page 480 #2 #3. Terrell County determines that of the $300,000 in property tax collections, $100,000 is for the school district and makes the payment to the district after an adjustment for a 2% collection fee which is paid (by check) to the general fund of Terrell County. Of the $50,000 use tax collection, $40,000 is for the maintenance district and makes a payment for the full amount less a 2% collection fee which is subsequently paid to the county. # Accounts Debit Credit Due to other governmental agencies – School District 100,000 Cash 98,000 Due to General Fund for collection efforts – 2% 2,000 Due to other governmental agencies – Maint. District 40,000 Cash 39,200 Due to General Fund for collection efforts – 2% 800 Due to General Fund for collection efforts – 2% 2,800 Cash 2,800 no entries on the government-wide because the fiduciary funds not included in the g-w statements see page 481 – Entries 3 docsity.com Debt service Fund-The following transactions occurred for Waterford County during the fiscal year 2003 which has a year end of June 30, 2003: The county sold bonds on July 1, 2002 in the amount of $2,000,000 at par that were to be repaid from the Debt Service Fund from proceeds of a special property tax assessment to residents of the park district. The transactions were recorded with dual tracking to be in compliance with GASB 34. As such the entries are made on both the governmental funds side and the government-wide side. For each of the following situations show the accounting entry (separate entries) for both the governmental fund accounting and the government-wide accounting – indicate what fund is being used for each entry. You can use t-accounts if you want. 1. What entries are made when the bonds are sold? Governmental Funds: General Fund: - see page 277 #2 Dr. Cash $2,000,000 Cr. Other financing sources – proceeds from bonds $2,000,000 Government-Wide: - GAAP accounting Dr. Cash $2,000,000 Cr. Bonds Payable $2,000,000 Where the money goes in not of interest to us now - that would be in the Capital Projects Fund accounting. 2. The first payment of the taxes was collected by the debt service fund in the amount of $50,000. What entries need to be made? Governmental Funds: General Fund: no entry Debt Service Fund: - see page 319 #5 Dr. Cash $50,000 Cr. Property Taxes Receivable $50,000 - the revenue was recorded when the taxes were establised Government-Wide: Dr. Cash $50,000 Cr. Property Taxes Receivable $50,000 3. The first interest payment is made in the amount of $20,000 on December 31, 2002. The following would entries would be made. Assume the government-wide uses full accrual accounting and prepares monthly financial statements: Governmental Funds: Debt Service Fund: - see page 319 #4 Dr. Interest Expenditure $20,000 Cr. Cash $20,000 Government-Wide: Dr. Interest Payable $20,000 - they have been accruing interest expense all along docsity.com #8 800,000 #8 800,0000 #9 675.000 #9 675.000 # 10 15,000 # 10 15,000 Bal – 1,500,000 Bal – 1,500,000 #11 1,500,000 Appropriations Other Financing Sources #1 20,000 #3 1,000,000 #11 20,000 #6 500,000 Bal – 1,500,000 #11 1,500,000 Fund Balance Revenue - Grants 20,000 opening balance #6 500,000 #1 20,000 #11 500,000 Bal - Zero SOLUTIONS CAPITAL PROJECTS QUIZ These questions are from another text – disregard the page references True/False 1. Level: Medium; Content: Concept False. As illustrated in Chapter 5, expenses on incomplete projects should be recorded in the governmental activities accounts as "Construction Work in Progress." When the project is completed, appropriate asset accounts are debited and the Construction Work in progress account is credited. 2. Level: Medium; Content: Concept True. The capital asset and related accumulated depreciation should be removed from the governmental activities accounts at the government-wide level. 3. Level: Medium; Content: Concept True. Reporting of such "infrastructure" assets had been an option until GASBS 34; infrastructure assets are now required to be capitalized, depending on the government’s capitalization policy. There are phase in effectives dates for capitalizing and depreciating infrastructure. 4. Level: Medium; Content: Concept False. Response: GASB standards specifically permit estimation of cost if historical cost is not known. 9. Level: Medium; Content: Concept False. The property owners do not own the assets even though they paid all, or part, of the construction or acquisition cost; the assets belong to the governmental unit. 13. Level: Medium; Content: Concept True. The depreciation expense becomes part of the functional expenses reported on the statement of activities at the government-wide level. docsity.com 14. Level: Medium; Content: Concept True. Illustration 5-2 is an example of required disclosures about general capital assets. Multiple Choice # Answer Level Content 35. B Easy Concept 36. B Medium Concept 37. A Medium Concept 47. A Easy Concept 69 C Medium Concept 71. B Easy Concept 74. A Medium Concept Chapter 6 Accounting for General Long-Term Liabilities and Debt Service Solutions to Take-Home Quiz – Disregard page number – different text 1. Level: Medium; Content: Concept True. GASBS 34 requires general capital assets to be reported in the government-wide statements as well as related long-term liabilities. 2. Level: Medium; Content: Concept False. GASB standards require that the obligation for special assessment debt be recorded in the governmental activities accounts if the government is obligated in any manner for the debt, even though primary responsibility for the debt rests with taxpayers in the special benefit district. 4. Level: Medium; Content: Concept False. The fund or funds that received the proceeds of the debt must also record the issuance. 5. Level: Easy; Content: Concept False. Debt limit is the term that is being described. Both definitions are given in Chapter 6. 6. Level: Medium; Content: Concept True. Debt margin is also called "borrowing power." 9. Level: Easy; Content: Concept True. This provision of GASB standards is quoted in Chapter 6. 10. Level: Medium; Content: Concept False. Debt service funds are created to account for interest expenditures, and revenues raised for debt service as well as for principal repayment. 11. Level: Medium; Content: Concept False. Debt service funds should be used to account for revenues or other financing sources used to provide debt service, and the related expenditures of these resources for debt service. However, the long- term debt itself should be accounted for in the governmental activities accounts. 17. Level: Easy; Content: Concept True. This is illustrated in Chapter 6. 20. Level: Easy; Content: Concept True. Chapter 6 defines the modification to the accrual basis specified for recognition of debt service expenditures under current GAAP. docsity.com # Answer Level Content 30. D Easy Concept 31. B Medium Concept 32. D Medium Concept 34. A Easy Concept 35. C Medium Concept 36. D Medium Journal Entry 37. C Medium Concept 39 A Easy Concept 40. C Medium Concept Accounting for Fiduciary ActivitiesAgency and Trust Funds SOLUTIONS TO TAKE-HOME QUIZ 2. Level: Easy; Content: Concept True. This is the definition given in Chapter 8. 3. Level: Easy; Content: Concept True. Agency funds of this nature are commonly found at the state level, and also at the county level. 4. Level: Easy; Content: Concept True. Tax agency funds should attempt to collect all taxes billed, and should charge back to the levying fund or unit only taxes billed in error, or taxes that, after all legal and reasonable means of collection have been exhausted, cannot be collected. 5. Level: Easy; Content: Concept False. Since all of the assets of an agency fund are offset by liabilities there is no fund equity or fund balance. 7. Level: Easy; Content: Concept True. The objective of pool creation is to professionalize the management of cash and investments and thereby improve both the safety of the principal and the earnings on the investments. 9. Level: Easy; Content: Concept True. Fiduciary funds account for assets held by a governmental unit under a trust relationship or an agency relationship. 13. Level: Medium; Content: Concept False. No authoritative organization recommends that Public Employee Retirement Systems (PERS) use budgetary accounts. 16. Level: Medium; Content: Concept False. Fiduciary activities report only on transactions in which the government is involved with parties external to the government. docsity.com