Question

Fund balance deficits may not be all bad.
Following are the balance sheet and statement of revenues, expenditures, and changes in fund balance for the Boulder, Colorado, Parks and Recreation Fund, a special revenue fund, for the year ended December 31, 2013 (dates changed):
Boulder, Colorado
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Year Ended December 31, 2013
(in thousands)
Revenues:
General property taxes................................................................... $ 855
Other taxes—development excise................................................. 663
Development fees.......................................................................... 13
Golf expansion fees....................................................................... 138
Interest earnings............................................................................ 42
Lease/rent from land..................................................................... 24
Other............................................................................................. 209
Total revenues............................................................................... 1,944
Expenditures:
Culture and recreation................................................................... 1,881
Interest ........................................................................................... 119
Total expenditures......................................................................... 2,000
Excess (deficiency) of revenues
over expenditures.......................................................................... (56)
Other financing uses:
Transfers-out.................................................................................. (123)
Net change in fund balance........................................................... (179)
Fund balance, beginning of year................................................... (367)
Fund balance, end of year............................................................ $ (546)
Balance Sheet as of
December 31, 2013 (in thousands)
Assets:
Cash and equivalents........................................................ $ 3
Investments at cost or amortized cost.............................. 902
General property taxes receivable..................................... 938
Accrued interest................................................................ 8
Other................................................................................. 9
Due from other funds....................................................... 14
Restricted asset—cash for special
Purposes...................................................................... 4
Total assets.................................................................. $1,878
Liabilities and fund balance:
Liabilities:
Vouchers and accounts payable.................................. $ 120
Salaries and wages payable........................................ 9
Advances from other funds........................................ 1,357
Deferred revenue—general
property taxes............................................................. 938
Total liabilities............................................................ 2,424
Fund balance.............................................................. (546)
Total liabilities and fund balance.................................... $1,878
A note to the financial statements states the following:
Fund Deficits
The Parks and Recreation Fund has a fund balance deficit of $546,539. This deficit is the result of the Parks and Recreation Fund expenditures: one-half of the cost of a central irrigation system for city parks and the acquisition of Roper Fields for soccer fields. The cost of the central irrigation system was shared with the Water Utility Fund to improve water conservation. The Parks and Recreation Fund has funded these projects through inter-fund loans, with December 31, 2013, balances of Water Utility Fund ($52,870) and Flood Control Utility Fund ($1,274,524).
1. Suppose that you are the chief accountant of the Parks and Recreation Department. A member of the city council accuses you and your department of mismanagement, as evidenced by the substantial fund deficit. How would you defend yourself? What is the significance of the fund deficit?
2. Prepare journal entries (as best you can with the information provided) in the Parks and Recreation Fund to record
a. The acquisition of the central irrigation system and the Roper Fields (assuming that the cost of the assets is equal to the December31, 2013, inter-fund loan balances, even though the acquisition was, in fact, made prior to 2013and a portion of the balances had already been repaid by December 31, 2013)
b. The inter-fund loans
3. A schedule of changes in general capital assets by function and activity indicates the following with respect to parks and recreation:
General capital assets as of January 1, 2013......................... $ 24,100
Additions, 2013.................................................................... 1,291
Deductions, 2013.................................................................. (373)
General capital assets as of December 31, 2013................... $ 25,018
How are the additions (which are other than the irrigation system and the soccer fields) and deductions most likely reflected in financial statements of the Parks and Recreation Fund?
4. Another note to the financial statements indicates that the Boulder city council levies property taxes by December 15 of each year. The taxes are payable in full by April 15, or in two installments by June 15, of the following year. Prepare the 2013 property tax entries (in summary form) most likely made in the Parks and Recreation Fund.


$1.99
Sales0
Views115
Comments0
  • CreatedApril 29, 2015
  • Files Included
Post your question
5000