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LO4 Exercise 10 The unadjusted trial balance for the general fund of the City of Pegasus at June 30, 2006 is as follows: Debits Accounts receivable $ 40,000 Cash 75,000 Due from agency fund 25,000 Encumbrances 60,000 Estimated revenues 975,000 Expenditures 750,000 Taxes receivable 250,000 Credits Allowance for doubtful accounts 5,000 Allowance for uncollectible taxes 50,000 Appropriations 785,000 Due to utility fund 40,000 Unreserved fund balance 30,000 Reserve for encumbrances 60,000 Revenues 990,000 Taxes received in advance 15,000 Vouchers payable 200,000 Supplies on hand at June 30, 2006.
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LO2 Exercise 1 Archery Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Archery at the  time of filing are summarized as follows: Book Value Estimated Realizable Value Cash $ 10,000 $ 10,000 Accounts receivable-net 60,000 50,000 Inventory 110,000 70,000 Equipment-net 70,000 70,000 Land 20,000 40,000 Building-net 200,000 150,000 Goodwill 42,000 $ 512,000 Accounts payable $ 120,000 Wages and salaries 30,000 Contributions due to pension plan 20,000 Taxes payable 80,000 Accrued interest payable (includes $10,000 from the mortgage payable and $2,000 from the note payable) 12,000 Note.
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LO1 Exercise 1 The City of Sharpesburg entered the following transactions during 2006: 1. The city authorized a bond issue of $2,500,000 par to finance construction of a fountain in the city square. The bonds were issued for $2,560,000. The premium was transferred to the fund for which the debt will be serviced. 2..
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LO1 Exercise 2 Spencer College assessed $1,350,000 in student tuition for the fall semester. The college estimates bad debts will be 2% of the gross assessed tuition. Spencer is located in Montana where a scholarship program provides for tuition waivers totaling $120,000. Estimated uncollectible tuition is $13,500. Determine the amount of revenue to.
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LO3 Exercise 9 Matrix Corporation owes Norman Finance Company $750,000 on a note payable plus $37,500 of accrued interest. Matrix has a cash flow shortage and negotiates a debt restructuring with Norman by issuing 60,000 shares of its $1.00 par value common stock to Norman on January 1, 2006. Matrix's common stock.
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LO1&2 Exercise 6 El Dorado County incurred the following transactions during 2006: 1. Marketable securities were donated to support the county's bike and nature trails. The donor acquired the securities for $35,000 ten years earlier; however, their current market value was $200,000. The donor specified that all income from the securities be used.
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Multiple Choice Questions LO1 1. What basis of accounting is used by proprietary funds? a. Modified accrual accounting. b. Accrual accounting. c. Cash basis accounting. d. Fair value accounting. LO1 2. Enterprise funds are accounted for in a manner similar to a. internal service funds. b. construction project funds. c. agency funds. d. private-purpose trust funds. LO1 3. Payments in lieu of taxes from an enterprise fund should be reported as a(n) a. operating expense. b. operating transfer out. c. nonoperating.
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LO2 Exercise 6 The balance sheet of the Nebe, Oak, and Pang partnership on October 1, 2006 (the date of partnership dissolution) was as follows: Cash $ 3,000 Liabilities $ 9,000 Other assets 33,000 Loan from Nebe 1,000 Loan to Oak 4,000 Nebe, capital (20%) 3,000 Oak, capital (30%) 6,000 Pang, capital (50%) 21,000 Total assets $ 40,000 Total liab./equity $ 40,000 In October, other assets with a book value of $15,000 were sold for $17,000 in.
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LO5 Exercise 9 Quan, Ray, Sen, and Tad are partners who share profits and losses 30%, 20%, 35%, and 15%, respectively. The partnership will be liquidated gradually over several months beginning January 1, 2006. The partnership trial balance at December 31, 2005 is as follows: Debits Credits Cash $ 3,000 Accounts receivable 10,000 Inventory 25,000 Loan to Ray 4,000 Furniture 15,000 Equipment 18,000 Goodwill 10,000 Accounts payable $ 12,000 Note payable 30,000 Loan from Sen 6,000 Quan,.
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LO3 Exercise 3 The following are transactions for the city of Oz. a. Borrowed $10,000 by issuing a two-year note. b. Issued a purchase order to a vendor for equipment worth $3,000. c. Licenses for $350 were billed on account. d. Received a $5,000 capital grant from another governmental fund. e. Accrued employee salary costs of $3,500. Required: 1. Analyze.
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LO3 Exercise 10 On December 31, 2006, Galvin Bank agreed to restructure a $900,000, 10% loan receivable from Hines Corporation because of Hines’ financial problems. The debt was issued at par and at December 31, there was accrued interest of $60,000 for six months. Terms of the restructuring agreement are as follows:   .
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LO5 Exercise 10 A cash distribution plan for the Upton, Valenta, and Walker partnership was as follows: Priority Creditors Upton Valenta Walker First $100,000 100% Next  $180,000 44% 10% 46% Next  $270,000 2/9 1/9 2/3 Remainder 11% 44% 45% Required: If $700,000 of cash was distributed by the partnership, how much was received respectively by the priority creditors, Upton, Valenta, and Walker? .
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LO3 Exercise 4 The following are transactions for the city of Oz. a. Borrowed $10,000 by issuing a two-year note. b. Issued a purchase order to a vendor for equipment worth $3,000. c. Licenses for $350 were billed on account. d. Received a $5,000 capital grant from another governmental fund. e. Accrued employee salary costs of $3,500. Required: 1. Analyze.
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LO1 Exercise 3 Prepare journal entries to record the following grant-related transactions for a municipality special revenue fund. 1.  Awarded an operating grant from the state, $2,500,000 (cash will be received after qualified expenditures are made). 2.  Incurred and paid qualifying expenditures on the grant program, $1,600,000. 3.  Received a federal grant to finance.
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LO3 Exercise 1 The following are transactions for the city of Novo. a. Borrowed $10,000 by issuing a three-month note. b. Paid $2,000 for equipment. c. Services for $250 were billed and collected. d. Issued general obligation bonds, par value of $5,000, at 101 (101% of par value) to finance construction of a building. e. Incurred.
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LO6 Exercise 10 List the financial statements and/or schedules required to be presented for each of the following funds and entities as well as the required basis of accounting. 1. Agency Fund 2. General Fund 3. Private-purpose Trust Fund 4. Government-wide Financial Statements .
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LO1 Exercise 3 Record the following transactions in the Porter Hospital enterprise fund: Gross patient services revenues: $10,000,000. Included in the above revenues are: charity services, $200,000; contractual adjustments, $700,000; and estimated uncollectible amounts, $350,000. Purchased equipment by issuing a 5-year note for $80,000. Received cash donations restricted for a capital building addition program, $2,200,000. Incurred and.
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LO3 Exercise 2 The following are transactions for the city of Novo. a. Borrowed $10,000 by issuing a three-month note. b. Paid $2,000 for equipment. c. Services for $250 were billed and collected. d. Issued general obligation bonds, par value of $5,000, at 101 (101% of par value) to finance construction of a building. e. Incurred and.
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LO4 11. Which type of fund is used to account for a government activity that sells goods or services either solely or almost solely to external customers? a. A temporary fund. b. A general fund. c. An agency fund. d. An enterprise fund. LO4 12. Centralized data processing, central motor pools and garages, centralized risk-financing activities, and central stores typically would be accounted.
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LO2 Exercise 6 Kresta Corporation is being liquidated under Chapter 7 of the Bankruptcy Act. The trustee has determined that the unsecured claims will receive $.25 on the dollar. Loanstar Corporation holds an $80,000 mortgage note receivable from Kresta that is secured by marketable securities with an $88,000 book value and a.
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LO3 11. Which of the following approaches is used to recognize governmental fund revenues? a. The gross amounts earned approach. b. The gross amounts levied approach. c. The net of estimated uncollectible accounts approach. d. The net of related expenditures approach. LO3 12. At any point in time, a government will be able to spend an amount equal to a. appropriations minus expenditures. b. appropriations minus expenditures.
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LO1 Exercise 1 Prepare journal entries to record the following transactions in the enterprise fund for a state university. Tuition and fees assessed total $8,000,000 of which 80% was collected by year-end; scholarships were granted for $300,000 and $200,000 was estimated to be uncollectible. Revenues collected from sales and services to the university.
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Multiple Choice Questions LO1 1. When the bankruptcy court grants an order for relief a. creditors may not seek payment for their claims directly from the debtor corporation. b. the reorganization plan was accepted by creditors having at least one-half of the total number of claims and the claims represent at least two-thirds of the total.
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LO4 Exercise 9 The following information regarding the fiscal year ended September 30, 2006, was drawn from the accounts and records of the Jasper County general fund: Revenues and other asset inflows: Taxes $ 12,000,000 Licenses and permits 2,500,000 Intergovernmental grants 1,000,000 Proceeds of short-term note issuances 1,200,000 Collection of interfund advance to other fund 800,000 Receipt of net assets of terminated fund 1,800,000 Expenditures and other.
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LO2 Exercise 7 The partnership of Hanly, Ide, and Jen was dissolved. By August 1, 2006, all assets had been converted into cash and all partnership liabilities were paid. The partnership balance sheet on August 1, 2006 (with partner residual profit and loss sharing percentages) was as follows: Cash $ 50,000 Hanly, capital(30%) $   4,000 Ide, capital(20%) (60,000) Jen, capital(50%)  .
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LO1 11. Creditor committees are elected a. in all bankruptcy cases. b. in Chapter 7 cases. c. only in bankruptcy cases arising from involuntary petitions. d. in Chapter 11 cases. LO2 12. The first-to-last ranking order of priority of the following: I.stockholder claims II.unsecured priority claims III.secured claims II.unsecured nonpriority claims in a Chapter 7 bankruptcy case is a. I,II,IV, and III. b. III,II,IV and I. c. III,I,IV, and II. d. II,IV,III,and I. LO2 13. In typical trustee accounting a. gains.
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LO1 Exercise 2 1. The city issued $6 million of refunding bonds at par. 2. The city transferred $3,700,000 from its General Fund to its Debt Service Fund to provide the additional resources needed to defease the bonds in substance. 3. The city paid $9,700,000 into an irrevocable trust established at the First Seaside.
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LO1&2 Exercise 7 Johnson County incurred the following transactions during 2006: 1. The county authorized a new general obligation bond issue of $5 million par to purchase an office building with a contract price of $4,975,000. The bonds were issued for $4,960,000. 2. The county levied real property taxes of $10,000,000. Sixty per.
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LO1 Exercise 5 Prepare journal entries in an Internal Service Fund of Prat County to record each of the following transactions. Purchased equipment on September 1 by paying $25,000 down and borrowing $100,000 on a 6%, 2-year note.  Billed General Fund departments $620,000 for services provided to those departments. Billings to the Enterprise.
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LO3 Exercise 8 Logan Corporation owes Mango Finance Company $825,000 plus $53,750 of accrued interest. Logan has a cash flow shortage and arranges for an equity settlement of the loan with Mango by issuing 55,000 shares of its $1.00 par value common stock to Mango on April 1, 2006. Logan common stock.
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LO4 Exercise 8 For each of the following events or transactions, identify the fund or funds that will be affected. 1. A city government charges a fee for the use of the municipal golf        course. 2. Interest is paid on state government revenue bonds. 3. A motor pool was established to handle the vehicle.
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LO4 Exercise 9 For each of the following events or transactions, identify the fund or funds that will be affected. 1. A central purchasing department was established to handle all the    purchasing needs of a county government. 2. A county government levies real property taxes on behalf of the county and its municipalities. 3..
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LO3 Exercise 7 On December 31, 2005, Goldcoast bank agreed to restructure an $800,000, 10% loan receivable from Fielding Corporation because of Fielding’s financial problems. The loan was issued at par and at December 31, there was $40,000 of accrued interest for a six-month period. Terms of the restructuring agreement are as.
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LO1 Exercise 4 The general fund trial balance for Overland City held the following balances at September 30, 2006, just before closing entries were made: Due from other funds $ 750 Unreserved fund balance 5,000 Estimated revenues 20,000 Revenues 18,950 Appropriations 19,000 Expenditures - current year 16,800 Expenditures - prior year 2,500 Encumbrances 1,200 Operating transfers in 4,000 Reserve for encumbrances 1,200 Reserve for encumbrances - prior year 2,500 Required Prepare the necessary closing entries. .
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Multiple Choice Questions LO1 1. When a capital lease is used to acquire general fixed assets, the governmental fund acquiring the fixed assets records a(n) __________________at the _____________________. a. expenditure, lease payment cost. b. fixed asset, lease payment cost. c. expenditure, present value of the minimum lease payments. d. fixed asset, present value of the minimum lease payments. LO1 2. The estimated revenues control.
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LO4 Exercise 7 For each of the following events or transactions, identify the fund or funds that will be affected. 1. A city government provides electricity services to residents for a fee. 2. A printing shop was established to handle the printing needs of a county government. 3. A philanthropist donates $1 million for a.
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LO2 Exercise 5 Jones Corporation is being liquidated under Chapter 7 of the Bankruptcy Act. The trustee has determined that the unsecured claims will receive $.50 on the dollar. Kevin Corporation holds a $200,000 mortgage note receivable from Jones that is secured by marketable securities with a $150,000 book value and a.
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LO5 Exercise 8 Luis, Mac, Nel, and Oma are partners who share profits and losses 40%, 25%, 25%, and 10%, respectively. The partnership will be liquidated gradually over several months beginning January 1, 2006. The partnership trial balance at December 31, 2005 is as follows: Debits Credits Cash $ 3,000 Accounts receivable 19,000 Inventory 25,000 Loan to Nel 5,000 Furniture 15,000 Equipment 10,000 Goodwill 12,000 Accounts payable $ 14,000 Note payable 30,000 Loan from Luis 5,000 Luis,.
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LO2*& Exercise 4 Buckley Corporation incurred major losses in 2005 and entered into voluntary Chapter 7 bankruptcy in the early part of 2006. By  July 1, all assets were converted into cash, the secured creditors were paid, and $74,000 in cash was left to pay the remaining claims as follows: Accounts payable $ 22,000 Claims prior.
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LO3 11. Which of the following does not appear on the statement of cash flows as an operating activity? a. Receipts from interfund reimbursements. b. Payments for taxes and in lieu of taxes. c. Payments for interest. d. Fines for late service payments. LO3 12. Which of the following is not a fiduciary fund? a. A permanent fund. b. A proprietary fund. c. A trust fund. d. An agency fund. LO3 13. What basis.
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LO3 Exercise 8 Address the following situations separately. 1.For the budgetary year beginning July 1, 2006, Center Township expected the following cash flow resources: Property taxes, licenses, and fees........................$3,000,000 Proceeds of debt issue................................1,000,000 Interfund transfers from debt service........................750,000 In the budgetary entry, what amount did Center Township record for estimated revenues? 2. During the fiscal year ended June.
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Multiple Choice Questions LO1 1. Before the establishment of the Governmental Accounting Standards Board, which organization developed GAAP for governments? a. The Financial Accounting Standards Board. b. The Financial Accounting Foundation. c. The National Council on Governmental Accounting. d. There was no structured organization for governmental GAAP before the GASB. LO1 2. What GAAP pronouncements take precedence for an auditor under SAS 69? a. Financial Accounting.
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LO2 Exercise 5 The balance sheet of the Jody, Kane, and Lark partnership on May 1, 2006 (before commencement of partnership liquidation) was as follows: Cash $ 54,000 Accounts payable $ 28,000 Inventory 60,000 Notes payable 60,000 Loan to Jody 10,000 Jody, capital (30%) 32,000 Loan to Lark 16,000 Kane, capital (45%) 90,000 Plant assets-net 110,000 Lark, capital (25%) 40,000 Total assets $ 250,000 Total liab./equity $ 250,000 Liquidation events in May were as follows: - The inventory was sold for.
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LO2 Exercise 2 Hinsch Company is in bankruptcy and is being liquidated under the provisions of Chapter 7 of the bankruptcy code. The trustee has converted all assets into $120,000 cash and has prepared the following list of approved claims: Customer deposits ($1,000 from each of two customers  that ordered products that were.
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LO2 Exercise 3 Ingham Corporation is being liquidated under Chapter 7 of the Bankruptcy Act. The trustee has determined that the unsecured claims will receive $.30 on the dollar. Platinum Corporation holds a $35,000 mortgage note receivable from Ingham that is secured by equipment with a $17,500 book value and a $7,000.
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LO2 Exercise 4 A cash distribution plan for the Folger, Glover, and Hale partnership was as follows: Priority Creditors Folger Glover Hale First $250,000 100% Next $100,000 70% 30% Next $150,000 11/15 4/15 Remainder 20% 35% 45% Required: If $850,000 of cash was distributed by the partnership, how much was received respectively by the priority creditors, Folger, Glover, and Hale? .
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LO1 Exercise 5 The general fund trial balance for Owens Creek City held the following balances at June 30, 2006, just before closing entries were made: Due from other funds $ 2,700 Unreserved fund balance 51,000 Estimated revenues 208,000 Revenues 198,900 Appropriations 196,500 Expenditures - current year 193,800 Expenditures - prior year 4,500 Encumbrances 3,200 Operating transfers in 6,000 Reserve for encumbrances 3,200 Reserve for encumbrances - prior year 4,500 Required Prepare the necessary closing entries. .
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LO1 Exercise 4 Journalize the following utility transactions in the Brown County enterprise fund: Billings to external customers $1,600,000, billings to Brown County    governmental funds $130,000. Collected refundable deposits from new utility customers $10,000. Collected 95% of all billings by fiscal year-end. Refunded $4,000 in deposits to former utility customers. Unbilled services to outside customers at year-end.
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