CHAPTER 7:

ACCOUNTING FOR THE BUSINESS-TYPE ACTIVITIES OF STATE AND LOCAL GOVERNMENTS

OUTLINE T"pe#T$%& S'$'u% (re: )*#e+ 7-1 7-3 7-4 7-% 7-' 7-1) 7-11 7-12 7-13 7-14 7-2 7-1 7-3 7-1 7-2 Revised 7-& 7-% Revised 7-4 7-7 7-' 7--

Number ,ue%' o-%: 7-1 7-2 7-3 7-4 7-& 7-% 7-7 7-' 7-7-1) C$%e%: 7-1 7-2 7-3

Top !

Compare internal service and enterprise funds Benefits of internal service funds Reason for internal service funds Pricin polic! for "#$ Restricted assets of enterprise funds (ri inal cost of public utilities Cas* flo+s in proprietar! funds ,ccrued utilities revenues #e ment information #olid +aste landfills Buildin maintenance fund "nternal service fund policies . Columbia/ 0( 0ass transit s!stem

Contrast Describe Explain Describe Describe Define Describe Describe Define Explain ,ssess ,ssess Evaluate Examine 0ultiple C*oice $inancial #tatement 2Es and $E 2ournal Entries Compute and 2Es 2Es and $# $# and recommend

E.er! %e%#Prob/em%: 7-1 Examine t*e C,$R 7-2 1arious 7-3 ,utomotive #ervice $und 7-4 "nsurance internal service fund 7-& Central 3ara e "#$ . Cit! of ,s*ville 7-% 4tilit! Plant $und 7-7 Cit! of 5empleton 6ater 4tilit! $und 7-' Cit! of 5empleton 7cont8d9

124

CHAPTER 7:
,ns+ers to :uestions 7;1;

ACCOUNTING FOR THE BUSINESS-TYPE ACTIVITIES OF STATE AND LOCAL GOVERNMENTS

"nternal service funds and enterprise funds are similar in t*at t*e! are bot* proprietar! funds and t*us follo+ business-t!pe accountin principles/ includin accrual accountin and man! $,#B standards; 5*e! are different in t*eir purpose and in t*eir presentation in t*e overnment-+ide financial statements; "nternal service funds are created primaril! to provide oods and services to ot*er departments of t*e same overnment< enterprise funds are created mainl! to provide oods and services to t*e eneral public or to ot*er departments of t*e same overnment in exc*an e transactions/ suc* as for +ater/ electricit!/ and se+a e treatment; Bot* internal service funds and enterprise funds are presented as proprietar! funds in t*e funds financial statements; =o+ever/ since t*e transactions of internal service funds predominatel! involve sales of oods or services to t*e 3eneral $und and ot*er funds t*at comprise t*e overnmental activities of a overnment/ t*eir financial balances are allocated bac> on a pro rata basis to t*e overnmental funds/ and *ence collapsed into t*e overnment activities column of t*e overnment-+ide statements;

7-2;

5*e traditional benefit from establis*in internal service funds is improved mana ement of resources; =o+ever/ since overnment services are increasin l! bein financed b! user c*ar es/ anot*er benefit of proprietar! fund accountin is t*at it permits administrators to determine +*et*er user c*ar es are commensurate +it* operatin costs and +*et*er costs are reasonable in relation to benefits; 5!pical examples of activities accounted for in internal service funds are purc*asin / +are*ousin / and issuin supplies< motor pool< electronic data processin < printin < and ris> financin ; (rdinaril!/ t*e se re ation of resources for specific purposest*e creation of a fiscal entit!must be aut*ori?ed b! t*e le islative branc*; #ince a fund is bot* a fiscal entit! and an accountin entit!/ administrators enerall! cannot create a fund +it*out approval of t*e le islative branc*; 5*e pricin polic! depends on t*e vie+ of t*e internal service fund *eld b! t*ose +*o aut*ori?ed its establis*ment@ "s it supposed to recover direct cas* costs/ or direct and indirect costsA "s BcostB *istorical cost or replacement costA Does it *ave to repa! interfund loansA Does it *ave to enerate revenues for capital assets replacement and expansionA Restricted assets are assets t*at *ave been se re ated/ pursuant to a reement +it* an external part! or b! la+ or re ulation/ for a specified purpose and t*erefore are not available for t*e discretionar! use of mana ement; "tems t!picall! reported in t*e BRestricted ,ssetsB section of t*e statement of fund net assets include assets set aside for retirement of revenue bonds in conformit! +it* bond covenants and bond proceeds/

7-3;

7-4;

7-&;

12&

C*; 7/ ,ns+ers/ :uestion 7-& 7contCd9

rants/ and contributions restricted for capital purposes; Customer deposits are commonl! reported as restricted assets b! overnment utilities t*at use proprietar! fund accountin ; 7;%; ,s used in utilit! re ulator! accountin and reportin / original cost is t*e cost to t*e first o+ner +*o dedicated t*e propert! to public service; ,ssume/ for example/ a private individual constructed or purc*ased some asset to be used in suppl!in electric service to *im at a cost of D1))/))); "f t*e asset is sold for D14)/))) to an o+ner +*o uses it in servin t*e public/ +*ic* sells it to anot*er public service enterprise for D2))/)))/ Eori inal costB to t*e second o+ner and to t*e t*ird o+ner is D14)/))); 5*e t*ird o+ner +ould also record as accumulated depreciation of t*e asset t*e amount s*o+n on t*e boo>s of t*e second o+ner as accumulated depreciation; Historical cost to t*e first o+ner is D1))/)))< to t*e second o+ner/ D14)/)))< and to t*e t*ird/ D2))/))); 3,#B standards provide for four cate ories of cas* flo+s@ operatin activities/ noncapital financin activities/ capital and related financin activities/ and investin activities; 5*e transactions summari?ed and reported in t*ese cate ories are t*ose affectin cas* and cas* eFuivalents 7s*ort-term/ *i *l! liFuid investments9; C*apter 7 ives a fairl! detailed description of t*e t!pes of transactions reported in eac* of t*e four cate ories/ and provides t*e information needed to ans+er t*e second part of t*is Fuestion; 4tilities t*at meter t*eir service cannot read all meters simultaneousl!; ConseFuentl!/ t*e! read a set number of meters eac* +or>in da! and bill customers after t*e meters are read; ,t an! period-end man! meters *ave not been read in several +ee>s/ and ot*er bills *ave not been prepared for meters read recentl!; ,ccordin l!/ in order to state bot* assets and sales properl! it is necessar! to accrue t*e unbilled revenues for eac* roup of customers on t*e basis of avera e usa e per mont* times t*e number of da!s since meters +ere last read; #e ment information consists of >e! operatin and balance s*eet information for eac* enterprise fund discussed in C*apter 7; Revenue bonds and ot*er debt instruments are secured b! t*e revenues of individual enterprise funds/ not b! t*e a re ate revenues of all enterprise funds; Bond*olders/ anal!sts/ and ot*ers t*erefore need se ment disclosures for enterprise funds as reFuired b! 3,#B standards; 5*e 3,#B Codification/ and an! statements/ interpretations/ and tec*nical bulletins issued since t*e most recent Codification provide uidance as to current disclosure standards;

7-7;

7-';

7--;

7;1); Calculation of t*e estimated total current cost of municipal solid +aste landfill closure and postclosure is Fuite complex and +as deemed be!ond t*e scope of t*e discussion in C*apter 7; =o+ever/ once t*e estimated total cost *as been calculated/ 3,#B standards reFuire t*e enterprise fund to reco ni?e an expense and related liabilit! eac* period usin t*e units of production met*od so t*at t*e estimated total cost is assi ned to periods on t*e basis of usa e rat*er t*an passa e of time; Reco nition of an expense and liabilit! on
C*; 7/ ,ns+ers/ :uestion 7-1) 7contCd9

12%

t*e basis of usa e appears rational since it +ill produce a cumulative accrued liabilit! t*at more realisticall! reflects Bcloseness to closureB t*an +ould t*e passa e of time; 4nusuall! *eav! usa e in a sin le period/ or a fe+ periods/ ma! su est t*e landfill +ill not last as lon as expected before it is filled to capacit!; "n t*is case/ accumulation of t*e accrued liabilit! on t*e basis of time could materiall! understate t*e actual liabilit!; #olutions to Cases 7-1; a; 5*e financial statements su est t*e Buildin 0aintenance $und is not bein accounted for and reported in accordance +it* 3,#B standards for internal service funds/ as described in C*apter 7; "n particular/ t*ere is no indication on t*e balance s*eet t*at eFuipment and capital assets of t*e Buildin 0aintenance $und 7of +*ic* t*ere s*ould some/ iven t*e nature of t*e operation9 are bein accounted for +it*in t*e fund; ,s a conseFuence/ depreciation also is not bein c*ar ed on eFuipment and propert!/ plant/ and eFuipment; , loo> at t*e fund eFuit! section of t*e balance s*eet and operatin statement su ests Fuite clearl! t*at t*e Buildin 0aintenance $und is bein accounted for as a overnmental fund t!pe rat*er t*an internal service fund; 5*is is evident b! t*e use of t*e line item Efund balanceG rat*er t*an net assets/ se re ated into 19 invested in capital assets/ net of related debt/ 29 restricted/ and 39 unrestricted< and t*e matc*in of expenditures 7rat*er t*an expenses9 to revenues in t*e operatin statement; $inall!/ t*e preferred name of t*is financial statement/ if t*e fund is to reflect t*e uidance of 3,#B# 34, is statement of fund net assets/ rat*er t*an balance s*eet; ,s mana er of a Cit! department !ou s*ould +ant to >no+ t*e full cost of Buildin 0aintenanceCs operations; #uc* information +ould aid in determinin t*e appropriateness and fairness of t*e fundCs c*ar es to departments; ,lt*ou * t*e financial statements indicate t*at revenues exceed expenditures onl! sli *tl!/ t*e statements fail to disclose t*e relations*ip bet+een operatin revenues and operatin expenses; ,s suc*/ t*e! provide !ou +it* little useful information/ even t*ou * as a Cit! emplo!ee !ou mi *t *ave a prett! ood idea if t*e salaries/ +a es/ and number of emplo!ees of t*e Buildin 0aintenance $und +ere in line +it* t*ose of t*e rest of t*e Cit! departments; Cas* and "nvestments exceed current liabilities if one assumes t*at t*e accrued annual leave is a lon -term liabilit! and ot*er accrued liabilities are current liabilities; 7"f current liabilities +ere reported separatel! it +ouldn8t be necessar! to uess +*ic* is current and +*ic* is lon -term;9 "t +ould also be useful to >no+ *o+ t*e accrued annual leave +as computed/ and *o+ muc* of t*is +ill probabl! *ave to be paid eac* !ear; $inall!/ one s*ould determine t*at t*e "nventor! fi ure does not include an excessive suppl! of materials t*at could be obtained readil! from suppliers +*en needed;

b;

127

C*; 7/ #olutions/ Case 7-1 7contCd9

"t is also possible t*at some mana ers of Cit! departments t*at use t*e services of t*e Buildin 0aintenance $und ma! *ave little interest in t*e financial statements if t*e emplo!ees of t*at $und are doin a ood Hob of >eepin t*e Cit!Cs buildin s +ell maintained/ and t*e c*ar es of t*at $und do not strain t*eir maintenance bud ets; "f/ *o+ever/ t*e! perceived t*e service to be poor or t*e c*ar es to be excessive/ t*e lac> of full accrual financial information to obHectivel! evaluate t*e Buildin 0aintenance mana erCs performance could become a problem; 7-2; a; 6*ile individual students ma! disa ree +it* t*ese policies/ most +ill a ree t*at t*e policies encoura e t*e establis*ment of internal service funds +*en needed and t*us contribute to improved resource mana ement; 5*e policies allo+ internal service funds to recover t*e full cost of oods or service provided/ includin debt service/ capital replacement/ and allo+ance of one mont*8s +or>in capital; 719 Council members s*ould find t*e fundin policies reasonable and dra+ comfort from t*e limitations placed on mana ement8s abilit! to build up cas* in internal service funds b! overc*ar in departments for oods and services; 5op mana ement 70a!or or Cit! 0ana er9 ma! consider t*ese policies overl! restrictive since t*e! limit mana ement8s abilit! to adHust rates to meet t*e specific needs of individual internal service funds; Department *eads s*ould find t*e fundin policies reasonable since t*e policies provide for recover! of full costs but do not allo+ t*e internal service fund to ma>e a profit; ,ssumin t*e internal service fund activities are efficientl! mana ed/ departments s*ould pa! less for oods and services purc*ased internall! t*an t*e! +ould for t*e same oods or services purc*ased from external suppliers/ especiall! after considerin loss of volume discounts and duplicative activities 7suc* as procurement/ contractin / and added inventor! mana ement9 t*e departments +ould *ave to perform; "f t*is +ere not t*e case/ t*e cit! s*ould consider terminatin t*e internal service fund;

b;

729 739

c;

,s mentioned above/ mana ement ma! prefer more flexibilit! in settin billin rates; , closer readin su ests/ *o+ever/ t*at t*e policies do allo+ for differential ro+t* needs of individual funds in t*at 1))I of bud eted capital outla! 7rat*er t*an depreciation expense9 can be used in settin billin rates; 0oreover/ expansion t*rou * debt financin is feasible since debt service costs can be passed on to departments; $inall!/ t*e internal service funds8 bud eted capital outla!s and t*eir debt issuances are subHect to approval of t*e Cit! Council; 5*us t*e Council retains si nificant control over expansion of internal service funds;

12'

C*; 7/ #olutions/ 7ContCd9

7-3;

5*e information in t*e case provides no clearcut ans+er as to +*ic* fund t!pe s*ould be used to account for t*e mass transit s!stem/ since 3,#B# 34 reFuires t*e use of an enterprise fund onl! if t*e overnment intends to cover t*e full cost of operations +it* user fees or else bond financin to be repaid from enterprise fund revenues is used; Jeit*er appears relevant in t*is case; "f/ *o+ever/ t*e $inance Director and t*e *ead of D5# +is* to measure t*e full cost of operatin t*e mass transit s!stem/ t*en it is important t*at t*e accrual basis of accountin / includin depreciation/ be used; Determination of full cost +ould facilitate measurement of operational efficienc! and *elp determine +*et*er t*e 3eneral $und subsid! is reasonable in relation to benefits received; $urt*er/ t*e reFuirement to use fixed bud etin / includin appropriation control/ under special revenue fund accountin +ould detract from efficient operation of t*e mass transit s!stem; #ound mana ement t*us su ests t*e need to measure t*e full cost of operatin t*e mass transit s!stem and to use flexible bud etin as +ell mana ed business enterprises do; Enterprise fund accountin +ould measure full cost< special revenue fund accountin +ould not; 5*us/ alt*ou * t*e information provided su ests t*at t*e criteria for use of an enterprise fund as discussed in t*is c*apter are not met/ clearl! t*e use of enterprise fund accountin +ould be preferred;

#olutions to Exercises and Problems 7-1; #ince eac* student *as a different annual report/ no t+o ans+ers to t*is exercise +ill be exactl! ali>e; #tudents +*ose overnmental reports conform to 3,#B# 34 +ill provide an interestin contrast to students +*ose overnments +*o ma! not !et *ave adopted t*e 3,#B# 34 reportin model; 4se t*is opportunit! to discuss t*e value of overnment+ide financial statements to determine t*e Eprofitabilit!G of proprietar! activities and t*e extent of subsidies from resources arisin from overnmental activities; ,irports are an example of enterprise funds t*at ma! or ma! not provide additional resources to provide eneral overnmental services; 1; 2; 3; 4; &; b; d; b. c; d; %; 7; '; -; 1); a; b; d; d; c;

7-2;

12-

C*; 7/ #olutions 7ContCd9

7-3.

TOWN OF SANDERS AUTOMOTIVE SERVICE FUND GENERAL JOURNAL (NOT REQUIRED) Debits C e!its

".

WAGE E#$ENSE $A(ROLL TA# E#$ENSE CAS* DUE TO FEDERAL GOVERNMENT

333%&'' )3%37& )+'%''' ,,%-7& ,&%&'' ,&%&'' )3%&'' )3%&'' "'%&'' "'%&'' "&7%&'' "&7%&'' "&)%3'' "&)%3'' &,'%''' &,'%'''

).

DUE TO FEDERAL GOVERNMENT CAS*

3.

UTILIT( E#$ENSE DUE TO OT*ER FUNDS

..

OFFICE E#$ENSES CAS*

&.

SERVICE SU$$LIES INVENTOR( ACCOUNTS $A(A/LE

,.

COST OF $ARTS AND SU$$LIES USED SERVICE SU$$LIES INVENTOR(

7.

DUE FROM OT*ER FUNDS /ILLINGS TO DE$ARTMENTS

13)

C*; 7/ #olutions/ 7-3 7Cont8d9

Debits -. CAS* DUE FROM OT*ER FUNDS ()'%)'' 0 &,'%''' - 3'%''') +. DUE TO OT*ER FUNDS CAS* "'. ACCOUNTS $A(A/LE CAS* (")%7'' 0 "&7%&'' - "3%)&') "". DE$RECIATION OF MAC*INER( AND EQUI$MENT DE$RECIATION OF /UILDINGS ALLOWANCE FOR DE$RECIATION MAC*INER( AND EQUI$MENT ALLOWANCE FOR DE$RECIATION/UILDINGS "). Closing Entries1 /ILLINGS TO DE$ARTMENTS WAGE E#$ENSE $A(ROLL TA# E#$ENSE UTILIT( E#$ENSE OFFICE E#$ENSES COST OF $ARTS AND SU$$LIES USED DE$RECIATION OF MAC*INER( AND EQUI$MENT DE$RECIATION OF /UILDINGS O$ERATING INCOME &,'%''' +%''' ,%3'' "&,%+&' )"%-'' &&'%)''

C e!its &&'%)''

)"%-''

"&,%+&'

+%''' ,%3''

333%&'' )3%37& )3%&'' "'%&'' "&)%3'' +%''' ,%3'' "%&)&

131

C*; 7/ #olutions/ 7-3 7Cont8d9

Debits O$ERATING INCOME NET ASSETS - UNRESTRICTED NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS 2 UNRESTRICTED "&%3'' "%&)&

C e!its

"%&)&

"&%3''

132

C*; 7/ #olutions/ 7-3 7Cont8d9 TO0N OF SANDERS T- ACCOUNTS FOR AUTOMOTIVE SERVICE FUND (NOT RE,UIRED+ CASH DUE FROM OTHER FUNDS 1-23-34 (7+ )56333 5536*33 ()+ *136333 (*+ 856533 (4+ )36533 (1+ *)6733 ()3+ )586153 SERVICE SUPPLIES INVENTORY 1-23-34 (5+ 1-23-34 256233 )576533 BUILDINGS *)36333 ())+ MACHINERY AND E,UIPMENT DEPMACH 9 E,UIP 1-23-34 136333 1-23-34 *36333 ())+ ACCOUNTS PAYABLE ()3+ )586153 1-23-34 )*6733 (5+ NET ASSETS : UNRESTRICTED 1-23-34 556533 C;L; )65*5 C;L; )56233 NET ASSETS-INVESTED IN CAP; ASSETS C;L; )56233 0AGE E<PENSE ()+ (2+ ())+ ())+ 2226533 UTILITY E<PENSE *26533 16333 86233 CL; CL; CL; *26533 16333 86233 DEPRECIATION OF MACH; AND E,UIP; (4+ CL; DEPRECIATION OF BUILDINGS CL; 2226533 1-23-34 *476333 BILLINGS TO DEPARTMENTS CL; 5836333 (7+ 5836333 )576533 DUE TO OTHER FUNDS (1+ *)6733 1-23-34 (2+ 733 *26533 DUE TO FEDERAL GOVERNMENT (*+ 856533 1-23-34 )6533 ()+ 886775 16333 86233 ALLO0 FOR DEPBUILDINGS 1-23-34 736333 ALLO0 FOR (8+ )5*6233 1-23-34 276333 LAND 1-23-34 (7+ *36*33 5836333 (7+ 5536*33

PAYROLL TA< E<PENSE ()+ (8+ *26275 )5*6233 OFFICE E<PENSES )36533 )65*5 CL; CL; )36533 )65*5 OPERATING INCOME CL; CL; *26275 )5*6233 COST OF PARTS AND SUPPLIES USED

133

C*; 7/ #olutions/ 7-3 7Cont8d9

7-3. a.

TOWN OF SANDERS AUTOMOTIVE SERVICE FUND STATEMENT OF REVENUES% E#$ENSES% AND C*ANGES IN NET ASSETS FOR (EAR ENDED SE$TEM/ER 3'% )''& 3&,'%'''

/ILLINGS TO DE$ARTMENTS DIRECT COSTS1 WAGE E#$ENSE $A(ROLL TA# E#$ENSE UTILIT( E#$ENSES $ARTS AND SU$$LIES USED DE$RECIATION OF MAC*INER( AND EQUI$MENT TOTAL DIRECT COSTS INDIRECT COSTS1 WAGE E#$ENSE $A(ROLL TA# E#$ENSE UTILIT( E#$ENSES OFFICE E#$ENSES DE$RECIATION OF /UILDINGS TOTAL INDIRECT COSTS O$ERATING INCOME NET ASSETS% OCTO/ER "% )''. NET ASSETS% SE$TEM/ER 3'% )''& 33%3&' )%337 .%7'' "'%&'' ,%3'' +%''' 33''%"&' )"%'3"-%-'' "&)%3''

&'"%)-&-%7")

&7%"-7 "%&)& 3')%&'' 33'.%')&

b. ON T*E /ASIS OF T*E O$ERATING STATEMENT FOR T*E (EAR ENDED SE$TEM/ER 3'% )''&% T*E $RICING $OLIC( IS AC*IEVING T*E GOALS OF ENA/LING /ILLINGS TO DE$ARTMENTS TO COVER ALL DIRECT AND INDIRECT O$ERATING COSTS% INCLUDING DE$RECIATION. T*E NET INCOME FOR T*E (EAR IS ONL( .)7 OF " $ERCENT% WELL UNDER T*E 3 $ERCENT MA#IMUM SET FOR T*IS FUND.

134

C*; 7/ #olutions/ 7-3 7Cont8d9

c.

TOWN OF SANDERS AUTOMOTIVE SERVICE FUND STATEMENT OF NET ASSETS AS OF SE$TEM/ER 3'% )''&

ASSETS: CURRENT ASSETS1 CAS* DUE FROM OT*ER FUNDS SERVICE SU$$LIES INVENTOR( TOTAL CURRENT ASSETS CA$ITAL ASSETS1 LAND /UILDINGS LESS1 ALLOWANCE FOR DE$RECIATION MAC*INER( AND EQUI$MENT LESS1 ALLOWANCE FOR DE$RECIATION TOTAL CA$ITAL ASSETS TOTAL ASSETS LIABILITIES: ACCOUNTS $A(A/LE DUE TO FEDERAL GOVERNMENT DUE TO OT*ER FUNDS TOTAL CURRENT LIA/ILITIES NET ASSETS1 NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS - UNRESTRICTED TOTAL NET ASSETS )33%7'' ,-%3)& 44444444 3 3'.%')& "3%)&' )%-7& )%&'' "-%,)& 3)"'%''' 7,%3'' +'%''' )+%''' ,"%''' )3"%7'' 3))%,&' "33%7'' 37%''' 3 )'%.&' 3'%''' .'%&'' 3 +'%+&'

13&

C*; 7/ #olutions/ 7-3 7ContCd9

d.

TOWN OF SANDERS AUTOMOTIVE SERVICE FUND STATEMENT OF CAS* FLOWS FOR T*E (EAR ENDED SE$TEM/ER 3'% )''&

CAS* FLOWS FROM O$ERATING ACTIVITIES1 CAS* RECEIVED FROM CUSTOMERS CAS* $AID TO1 EM$LO(EES FEDERAL GOVERNMENT (W5T% FICA) SU$$LIERS OT*ER DE$ARTMENTS NET CAS* $ROVIDED /( O$ERATIONS NET INCREASE IN CAS* AND CAS* EQUIVALENTS CAS* AND CAS* EQUIVALENTS% "'5"5)''. CAS* AND CAS* EQUIVALENTS% +53'5)''& RECONCILIATION OF O$ERATING INCOME TO NET CAS* $ROVIDED /( O$ERATIONS O$ERATING INCOME ADJUSTMENTS1 DE$RECIATION E#$ENSEMAC*INER( 6 EQUI$MENT DE$RECIATION E#$ENSE/UILDINGS INCREASE IN INVENTOR( INCREASE IN RECEIVA/LES FROM OT*ER FUNDS INCREASE IN ACCOUNTS $A(A/LE INCREASE IN DUE TO FEDERAL GOVERNMENT INCREASE IN DUE TO OT*ER FUNDS NET CAS* $ROVIDED /( O$ERATING ACTIVITIES +%''' ,%3'' (&%)'') (+%-'') &&' "%37& "%7'' 3 &%.&' 3 "%&)& &%.&' "&%''' 3 )'%.&' 3()+'%''') (,&%&'') (",7%.&') ()"%-'') (&..%7&') 3 &%.&' 3&&'%)''

13%

C*; 7/ #olutions 7Cont8d9

7-.. a.

T7e I8s9 :8;e F98! ;e8t :<i=es :!>i8ist :ti?8 :8! :;;?98ti8@ A? bE 9ti<i=i8@ : D ?Aessi?8:< isB >:8:@e . L?Fe D e>i9>s <iBe<E : e ?bt:i8e! bE D??<i8@ s?>e isBs 98!e si8@<e D?<i;ies.

isB

>:8:@e>e8t :;tiCities :8! t79s D ?b:b<E :;7ieCes >? e eAAi;ie8t ?De :ti?8

b.

T7is A98! is :8 i8st 9>e8t:<itE 9se! t? ;?8t :;t A? :8! D:E D e>i9>s% : e@9<: :8! ;?8ti89i8@ :;tiCitE. Sett<e>e8ts ?A <?sses bE i8s9 :8;e ;?>D:8ies F?9<! be i e@9<: ?;;9 e8;es% eG9i i8@ sDe;i:< :tte8ti?8% Fit7 D ?;ee!s @?i8@ t? t7e A98!s t7:t : e eG9i e! t? D:E A? eD<:;e>e8t ?A !:>:@e! :ssets% ? A? ?t7e i8s9 e! <?sses. eD:i ?

c. Debits ". $RE$AID INSURANCE $REMIUMS VOUC*ERS $A(A/LE ). DUE FROM OT*ER FUNDS /ILLINGS TO DE$ARTMENTS E#$IRED INSURANCE $REMIUMS $RE$AID INSURANCE $REMIUMS 3. SALARIES AND WAGES E#$ENSE RENT E#$ENSE UTILITIES E#$ENSE MISCELLANEOUS E#$ENSE CAS* ")%.'' &%)'' -,' -'' "+%),' "+7%''' "+7%''' )",%7'' )",%7'' "3)%,)& "3)%,)& C e!its

137

C*; 7/ #olutions/ 7-4 D 7ContCd9

Debits .. CAS* E#$IRED INSURANCE $REMIUMS /ILLINGS TO DE$ARTMENTS DUE FROM OT*ER FUNDS &. VOUC*ERS $A(A/LE CAS* ,. CAS* OFS - INTERFUND TRANSFER IN 7. CAS* DUE FROM OT*ER FUNDS -. Closing Entry1 /ILLINGS TO DE$ARTMENTS E#$IRED INSURANCE $REMIUMS SALARIES AND WAGES E#$ENSE RENT E#$ENSE UTILITIES E#$ENSE MISCELLANEOUS E#$ENSE O$ERATING INCOME O$ERATING INCOME NET ASSETS - UNRESTRICTED OFS - INTERFUND TRANSFER IN NET ASSETS - UNRESTRICTED 7&%''' ".' )")%.'' "7'%&'' 7&%''' ")7%''' .%.'' .%'''

C e!its .%''' .%.''

")7%'''

7&%'''

"7'%&''

"+3%''' ")%.'' &%)'' -,' -'' ".' ".'

7&%'''

C*; 7/ #olutions/ 7-4 7ContCd9

d.

CIT( OF DALTON 13'

INSURANCE FUND STATEMENT OF NET ASSETS AS OF JUNE 3'% )''& ASSETS1 CAS* DUE FROM OT*ER FUNDS $RE$AID INSURANCE $REMIUMS TOTAL ASSETS LIABILITIES1 VOUC*ERS $A(A/LE """%&7' NET ASSETS1 NET ASSETS UNRESTRICTED e. CIT( OF DALTON INSURANCE FUND STATEMENT OF REVENUES% E#$ENSES% AND C*ANGES IN NET ASSETS FOR T*E (EAR ENDED JUNE 3'% )''& /ILLINGS TO DE$ARTMENTS O$ERATING E#$ENSES1 E#$IRED INSURANCE $REMIUMS SALARIES AND WAGES E#$ENSE RENT E#$ENSE UTILITIES E#$ENSE MISCELLANEOUS E#$ENSE TOTAL E#$ENSES O$ERATING INCOME INTERFUND TRANSFER IN INCREASE IN NET ASSETS NET ASSETS UNRESTRICTED% ,53'5)''. NET ASSETS UNRESTRICTED% ,53'5)''& 3"+3%''' ")%.'' &%)'' -,' -'' )")%),' .' 7&%''' 7&%'.' ",,%,&' 3 )."%,+' 3 )."%,+' 3 "'-%-+' 7"%-'' "7)%&7' 3 3&3%),'

3 )")%3''

13-

C*; 7/ #olutions/ 7-4 7ContCd9

f.

CIT( OF DALTON INSURANCE FUND STATEMENT OF CAS* FLOWS FOR T*E (EAR ENDED JUNE 3'% )''&

CAS* FLOWS FROM O$ERATING ACTIVITIES1 CAS* RECEIVED FROM CUSTOMERS CAS* $AID TO INSURERS CAS* RECEIVED FROM $REMIUM ADJUSTMENTS CAS* $AID TO EM$LO(EES CAS* $AID TO SU$$LIERS AND VENDORS .%''' (")%.'') (,%-,') (".)%),') 3)-%).' 7&%''' "'3%).' &%,&' 3"'-%-+' 3 (")7%''') 3 "7'%&''

NET CAS* $ROVIDED /( O$ERATING ACTIVITIES CAS* FLOWS FROM NONCA$ITAL FINANCING ACTIVITIES1 CONTRI/UTIONS FROM GENERAL FUND NET INCREASE IN CAS* AND CAS* EQUIVALENTS CAS* AND CAS* EQUIVALENTS% ,53'5)''. CAS* AND CAS* EQUIVALENTS% ,53'5)''& RECONCILIATION OF E#CESS OF NET /ILLINGS TO DE$ARTMENTS OVER COSTS TO NET CAS* $ROVIDED /( O$ERATIONS O$ERATING INCOME ADJUSTMENTS1 INCREASE IN RECEIVA/LES DECREASE IN $RE$AID INSURANCE $REMIUMS INCREASE IN VOUC*ERS $A(A/LE NET CAS* $ROVIDED /( O$ERATING ACTIVITIES

.' (."%-'') ,.%37& &%,)&

3 )-%).'

14)

C*; 7/ #olutions/ 7-4 7ContCd9

@. A8:<Esis1 D9 i8@ t7e Ee: % EHDe8sesIGe8e :< G?Ce 8>e8t :8! I8te 8:< /:<:8;es (:<te 8:tiCe<E% :8 :;;?98t s9;7 I8t :-A;tiCities /:<:8;e ;:8 be 9se!) 7:Ce bee8 e;? !e! A? t7e bi<<i8@s e;eiCe! A ?> t7e I8s9 :8;e F98! A? eHDi e! D e>i9>s :8! ?De :ti8@ ;?sts. It is :ss9>e! t7:t t7e I8s9 :8;e F98!s :ssets :8! <i:bi<ities :s ?A J98e 3'% )''.% 7:! bee8 :DD ?D i:te<E ;<?se! t? @?Ce 8>e8t:< :;tiCities ?8 t7:t !:te% :8! t79s Fe e eD? te! i8 t7e @?Ce 8>e8t-Fi!e st:te>e8t ?A 8et :ssets. I8 :@@ e@:te !9 i8@ t7e Ee: )''&% @?Ce 8>e8t:< :;tiCities F?9<! 7:! : 8et !ebit ?A 3)")%3'' t? EHDe8ses-Ge8e :< G?Ce 8>e8t (3)",%7''% T :8s:;ti?8 ) >i89s 3.%.''% T :8s:;ti?8 .)% :8! F?9<! 7:Ce 7:! 8et ; e!it t? I8te 8:< /:<:8;es i8 t7e s:>e :>?98t. N?te t7:t 8? ;:s7 A<?Fs A ?> @?Ce 8>e8t:< A98!s t? i8te 8:< se Ci;e A98!s% 8? :8E ;:s7 ?9tA<?Fs A ?> t7e I8s9 :8;e F98! t? :8E D: ties 7:s bee8 e;? !e! :t t7e @?Ce 8>e8t-Fi!e <eCe<. T? J;<?seK t7e I8s9 :8;e F98! t? @?Ce 8>e8t:< A;tiCities% it Fi<< be 8e;ess: E t?1 (") C e!it D:E>e8ts >:!e A ?> t7e I8s9 :8;e F98! C:s7 :;;?98t (t7is Fi<< 8et :@:i8st ;:s7 e;eiCe! bE t7e I8s9 :8;e F98! A ?> @?Ce 8>e8t:< A98!s% b9t F7i;7 7:! 8?t bee8 e;? !e! !9 i8@ t7e Ee: :t t7e @?Ce 8>e8t-Fi!e <eCe<)% !ebit ? ; e!it :8E 8et ;7:8@e i8 t7e $ eD:i! I8s9 :8;e $ e>i9>s :;;?98t% :8! !ebit ? ; e!it :8E 8et ;7:8@e i8 t7e V?9;7e s $:E:b<e :;;?98t. ()) E<i>i8:te :8E e<e>e8t ?A J8et i8;?>eK ? J8et <?ssK t7:t is eA<e;te! i8 t7e bi<<i8@s e;? !e! !9 i8@ t7e Ee: . As s7?F8 i8 t7e ?De :ti8@ st:te>e8t i8 $: t e% t7e e is : J8et i8;?>eK i8 t7e :>?98t ?A 3.' t7:t >9st be e<i>i8:te! :s ?8<E t7e ;?st ?A i8s9 :8;e t? t7e I8s9 :8;e F98! s7?9<! be eD? te! :s :8 eHDe8se :t t7e @?Ce 8>e8tFi!e <eCe<. U8 est i;te! Net Assets >9st be !ebite! :8! EHDe8sesGe8e :< G?Ce 8>e8t ; e!ite! i8 t7e @?Ce 8>e8t:< :;tiCities @e8e :< L?9 8:< t? eA<e;t : b e:B-eCe8 <eCe< ?A bi<<i8@ A ?> t7e I8s9 :8;e F98!. N?te t7:t Fe :ss9>e t7e I8te A98! T :8sAe ?A 37&%''' 7:s 8? ?Ce :<< eAAe;t ?8 @?Ce 8>e8t:< :;tiCities. F9 t7e % Fe :ss9>e it F:s 8?t e;? !e! :t t7e @?Ce 8>e8t-Fi!e <eCe<. /:se! ?8 t7is :8:<Esis% t7e A?<<?Fi8@ e8t ies s7?9<! be >:!e i8 t7e @?Ce 8>e8t:< :;tiCities @e8e :< L?9 8:< t? ;<?se t7e I8s9 :8;e F98! :;tiCities i8t? @?Ce 8>e8t:< :;tiCities :t t7e @?Ce 8>e8tFi!e <eCe<.

141

C*; 7/ #olutions/ 7-4 g 7ContCd9

Debits (") INTERNAL /ALANCES $RE$AID INSURANCE $REMIUM CAS* VOUC*ERS $A(A/LE &%,)& NET ASSETS - UNRESTRICTED ()) NET ASSETS - UNRESTRICTED E#$ENSES - GENERAL GOVERNMENT .' .' .' )")%3'' ,.%37& ".)%),'

N?te1 As i8 t7e eH:>D<e i8 t7e teHt% t7e 8et eAAe;t ?A t7ese t :8s:;ti?8s i8 t7e @?Ce 8>e8t:< :;tiCities :;;?98ts :t t7e @?Ce 8>e8t-Fi!e <eCe< is t? e!9;e Net Assets 2 U8 est i;te! bE 3)")%),' F7e8 EHDe8ses 2 Ge8e :< G?Ce 8>e8t is ;<?se! t? Net Asset 2 U8 est i;te!. T7is is D e;ise<E t7e ;?st t? t7e I8s9 :8;e F98! ?A D ?Ci!i8@ its se Ci;es A? t7e Ee: .

142

7-&. a.

CIT( OF AS*VILLE CENTRAL GARAGE FUND GENERAL JOURNAL Debits C e!its

".

INVENTOR( OF SU$$LIES VOUC*ERS $A(A/LE

+)%''' +)%''' ""'%''' ""'%''' )3&%''' )3&%''' 3'%''' 3'%''' "'%'''

).

COST OF SU$$LIES USED INVENTOR( OF SU$$LIES

3.

SALARIES AND WAGES E#$ENSE CAS*

..

UTILITIES E#$ENSE CAS*

&.

DE$RECIATION E#$ENSE/UILDING DE$RECIATION E#$ENSEMAC*INER( AND EQUI$MENT ALLOWANCE FOR DE$RECIATION/UILDING ALLOWANCE FOR DE$RECIATIONMAC*INER( AND EQUI$MENT

+%''' "'%'''

+%''' 3+7%''' 3+7%''' 3+'%''' 3+'%'''

,.

DUE FROM OT*ER FUNDS /ILLINGS TO DE$ARTMENTS

7.

CAS* DUE FROM OT*ER FUNDS

(3)'%''' 0 33+7%''' - 3)7%''' M 33+'%''')

C*; 7/ #olutions/ 7-& a 7Cont8d9

143

Debits -. VOUC*ERS $A(A/LE CAS*

(3.)%''' 0 3+)%''' - 3",%''' M 3""-%''')

C e!its

""-%''' ""-%'''

+.

Closing Entries: /ILLINGS TO DE$ARTMENTS COST OF SU$$LIES USED SALARIES AND WAGES E#$ENSE UTILITIES E#$ENSE DE$RECIATION E#$ENSE/UILDING DE$RECIATION E#$ENSEMAC*INER( AND EQUI$MENT E#CESS OF NET /ILLINGS OVER COSTS E#CESS OF NET /ILLINGS OVER COSTS NET ASSETS - UNRESTRICTED NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS 2 UNRESTRICTED "+%''' "+%''' 3%''' 3%''' +%''' 3%''' 3+7%''' ""'%''' )3&%''' 3'%''' "'%'''

144

C*; 7/ #olutions/ 7-& 7Cont8d9

b.

T*E CENTRAL GARAGE FUND FINANCIAL DATA S*OULD /E $RESENTED IN T*E INTERNAL SERVICE FUND COLUMN IN T*E1 STATEMENT OF NET ASSETS 2 $RO$RIETAR( FUNDS% STATEMENT OF REVENUES% E#$ENSES% AND C*ANGES IN FUND NET ASSETS 2 $RO$RIETAR( FUNDS% :8! STATEMENT OF CAS* FLOWS 2 $RO$RIETAR( FUNDS.

IN ADDITION% T*E INTERNAL SERVICE FUND /ALANCES S*OULD /E RE$ORTED IN T*E GOVERNMENTAL ACTIVITIES COLUMN OF T*E GOVERNMENT-WIDE FINANCIAL STATEMENTS UNLESS AN ENTER$RISE FUND IS T*E $REDOMINANT CUSTOMER OF T*E INTERNAL SERVICE FUND.

14&

C*; 7/ #olutions 7Cont8d9

7-,. a. ". /OND INTEREST $AID OR ACCRUED DURING $ERIOD OF CONSTRUCTION1 /OND INTEREST $AID ON JUL( "&% )''& 3+%'''%''' # .', # "5) (EAR M /OND INTEREST ACCRUED FOR . MONT*S (JUL( "& - NOVEM/ER "&% )''&) 3+%'''%''' # .', # .5") (EAR M /OND INTEREST $AID OR ACCRUED DURING T*E $ERIOD OF CONSTRUCTION ). INTEREST EARNED ON INVESTMENT OF /OND $ROCEEDS1 MARC* "& - ) MONT*S ACCRUED INTEREST ON 3"%&''%'''% AT RATE OF ,N% SOLD MA( "& - . MONT*S ACCRUED INTEREST ON 3"%&''%'''% AT RATE OF ,N% SOLD JUL( "& - , MONT*S INTEREST ON 3,%'''%'''% AT RATE OF ,N RECEIVED SE$TEM/ER "& - ) MONT*S ACCRUED INTEREST ON 33%'''%'''% AT RATE OF ,N% SOLD TOTAL INTEREST EARNED ON INVESTMENT OF /OND $ROCEEDS DURING $ERIOD OF CONSTRUCTION Debits 3. CONSTRUCTION WORO IN $ROGRESS ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
3.&'%''' ($ART ") - 3)&&%''' ($ART ))Q C*; 7/ #olutions/ 7-% 7Cont8d9

3)7'%'''

"-'%''' 3.&'%'''

3 "&%''' 3'%''' "-'%''' 3'%'''

3)&&%''' C e!its

"+&%''' "+&%'''

PNET INTEREST COST ON /ORROWED FUNDS DURING $ERIOD OF CONSTRUCTION M

Debits

C e!its

14%

b.

CONSTRUCTION WORO IN $ROGRESS ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION

)')%)&' )')%)&'

c.

OT*ER INCOME AND DEDUCTIONS1 INTEREST ON LONG-TERM DE/T (FOR "" "5) MONT*S1 3.&'%'''0 3+%'''%'''#.',#".&5")) ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION TOTAL INCOME AND DEDUCTIONS ("+&%''') 33))%&'' 3&"7%&''

NOTE1 OT*ER ITEMS T*AT WOULD /E RE$ORTED IN T*IS SECTION ARE NOT GIVEN IN T*E $RO/LEMR T*E NET EFFECT OF T*E INFORMATION GIVEN IS INTEREST E#$ENSE FOR T*E (EAR OF 33))%&''.

d.

OT*ER INCOME AND DEDUCTIONS1 ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 3)')%)&'

NOTE1 T*E NET EFFECT OF CA$ITALISING IM$UTED INTEREST IS TO INCREASE NET INCOME /( 3)')%)&' SINCE T*E DE/IT IS TO CONSTRUCTION WORO IN $ROGRESS (SEE ENTR( / A/OVE).

147

C*; 7/ #olutions 7ContCd9

7-7. a.

CIT( OF TEM$LETON WATER UTILIT( FUND GENERAL JOURNAL Debits C e!its "%'''%''' +)+%''' ,.%''' ,,%''' 3)%''' ++%''' )-%''' +''%'''

". CAS* OFS - INTERFUND TRANSFER IN ). UTILIT( $LANT IN SERVICE ACCOUNTS RECEIVA/LE MATERIALS AND SU$$LIES ACCUMULATED $ROVISION FOR UNCOLLECTI/LE ACCOUNTS ACCOUNTS $A(A/LE MISCELLANEOUS ACCRUALS CAS* NOTES1

"%'''%'''

". IF T*E NEW WATER UTILIT( FUND *AD /EEN SU/JECT TO REGULATION /( A STATE REGULATOR( COMMISSION% /OT* SOUT*LANDTS ORIGINAL COST AND ACCUMULATED DE$RECIATION WOULD *AVE /EEN RECORDED IN ENTR( ). IN T*AT CASE% AS E#$LAINED IN C*A$TER 7 UNDER UREGULATOR( ACCOUNTING $ROCEDURES%U A DE/IT TO UUTILIT( $LANT ACQUISTION ADJUSTMENTU IN T*E AMOUNT OF 3+"%''' WOULD ALSO *AVE /EEN REQUIRED IN ENTR( ). ). CAS*% CA$ITAL STOCO% AND RETAINED EARNINGS OF T*E SOUT*LAND WATER COM$AN( WERE NOT $URC*ASED /( T*E CIT( OF TEM$LETON AND T*US ARE NOT RECORDED IN ENTR( ).

14'

C*; 7/ #olutions/ 7-7 7Cont8d9

b.

CIT( OF TEM$LETON WATER UTILIT( FUND STATEMENT OF NET ASSETS JUNE 3'% )''.

ASSETS1 CURRENT AND ACCRUED ASSETS1 CAS* CUSTOMER ACCOUNTS RECEIVA/LE 3,.%''' ACCUMULATED $ROVISION FOR UNCOLLECTI/LE ACCOUNTS MATERIALS AND SU$$LIES TOTAL CURRENT AND ACCRUED ASSETS UTILIT( $LANT1 UTILIT( $LANT IN SERVICE TOTAL ASSETS AND OT*ER DE/ITS LIABILITIES1 CURRENT AND ACCRUED LIA/ILITIES1 ACCOUNTS $A(A/LE MISCELLANEOUS ACCRUALS TOTAL LIA/ILITIES NET ASSETS1 INVESTED IN $LANT UNRESTRICTED TOTAL NET ASSETS +)+%''' 7"%''' 3"%'''%''' ++%''' )-%''' ")7%''' +)+%''' "%")7%''' 3 "+-%''' 3)%''' 3)%''' ,,%''' 3 "''%'''

14-

C*; 7/ #olutions 7Cont8d9

7--. a.

CIT( OF TEM$LETON WATER UTILIT( FUND GENERAL JOURNAL Debits C e!its &''%''' )-%''' )-%''' .'%''' ,3)%''' ,7)%''' --%''' 3)%''' .'%&'' &"%&'' ,-%''' +3%''' 7,%''' 3&7%''' -',%''' "'%-'' ,%&'' 3.%&'' 3)%)'' -.%''' CAS* LONG-TERM NOTES $A(A/LE &''%'''

(")

())

MISCELLANEOUS ACCRUALS CAS*

(3)

DUE FROM GENERAL FUND CUSTOMER ACCOUNTS RECEIVA/LE SALES OF WATER

(.)

MATERIALS AND SU$$LIES SOURCE OF SU$$L( E#$ENSES $UM$ING E#$ENSES WATER TREATMENT E#$ENSES TRANSMISSION AND DISTRI/UTION E#$ENSES CUSTOMERS ACCOUNTS E#$ENSES ADMINISTRATIVE AND GENERAL E#$ENSES CONSTRUCTION WORO IN $ROGRESS ACCOUNTS $A(A/LE

(&)

SOURCE OF SU$$L( E#$ENSES $UM$ING E#$ENSES WATER TREATMENT E#$ENSES TRANSMISSION AND DISTRI/UTION E#$ENSES MATERIALS AND SU$$LIES

1&)

C*; 7/ #olutions/ 7-'/ 7Cont8d9

Debits "&%''' "'%'''

C e!its

(,)

CAS* LOSS FROM DIS$OSITION OF UTILIT( $LANT UTILIT( $LANT IN SERVICE

)&%'''

(7)

ACCUMULATED $ROVISION FOR UNCOLLECTI/LE ACCOUNTS CUSTOMER ACCOUNTS RECEIVA/LE )-%''' )-%''' "&%''' "&%''' .+-%''' .,'%''' 3-%''' -''%''' -''%''' &'' &'' &'' &''

(-)

CAS*ICUSTOMER DE$OSITS CUSTOMER DE$OSITS

(+)

CAS* CUSTOMER ACCOUNTS RECEIVA/LE DUE FROM GENERAL FUND

("')

ACCOUNTS $A(A/LE CAS*

("")

OT*ER INTEREST E#$ENSE CUSTOMER DE$OSITS CAS*ICUSTOMER DE$OSITS CAS*

(NOTE1 SECOND ENTR( UNDER "" REQUIRED TO TRANSFER 3&'' FROM UNRESTRICTED TO RESTRICTED CAS* FOR INTEREST OWED TO CUSTOMERS)

("))

DE$RECIATION E#$ENSE ACCUMULATED $ROVISION FOR DE$RECIATION OF UTILIT( $LANT

.7%'&' .7%'&'

C*; 7/ #olutions/ 7-'/ 7Cont8d9

Debits 1&1

C e!its

("3)

MATERIALS AND SU$$LIES ACCOUNTS $A(A/LE

7%''' 7%''' .'%''' .'%''' .'%''' .'%''' ,%3)' ,%3)' "''%''' "''%''' "''%''' "''%'''

(".)

INTEREST ON LONG-TERM DE/T CAS*

("&)

CONSTRUCTION WORO IN $ROGRESS ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION

(",)

CUSTOMER ACCOUNTS E#$ENSES ACCUMULATED $ROVISION FOR UNCOLLECTI/LE ACCOUNTS

("7)

CAS*IRE$A(MENT OF LONG-TERM NOTES CAS* NET ASSETS 2 UNRESTRICTED NET ASSETS 2 RESTRICTED FOR RE$A(MENT OF LONG-TERM NOTES

1&2

C*; 7/ #olutions 7-'/ 7Cont8d9

Debits ,7)%''' .'%'''

C e!its

("-)

Closing entries1 SALES OF WATER ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION SOURCE OF SU$$L( E#$ENSES $UM$ING E#$ENSES WATER TREATMENT E#$ENSES TRANSMISSION AND DISTRI/UTION E#$ENSES CUSTOMER ACCOUNTS E#$ENSES ADMINISTRATIVE AND GENERAL E#$ENSES LOSS FROM DIS$OSITION OF UTILIT( $LANT OT*ER INTEREST E#$ENSE DE$RECIATION E#$ENSE INTEREST ON LONG-TERM DE/T NET ASSETS UNRESTRICTED NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS 2 UNRESTRICTED T? :!L9st 8et :ssets A? !eD e;i:ti?8. NET ASSETS 2 UNRESTRICTED NET ASSETS 2 INVESTED IN CA$ITAL ASSETS 3+7%''' 3+7%''' .7%'&' .7%'&' .)%-'' .7%''' -,%''' "''%)'' ++%3)' 7,%''' "'%''' &'' .7%'&' .'%''' ",3%"3'

T? :!L9st 8et :ssets A? C?8st 9;ti?8 W? B i8 $ ?@ ess. NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS 2 UNRESTRICTED T? :!L9st 8et :ssets A? <?ss. NET ASSETS 2 INVESTED IN CA$ITAL ASSETS NET ASSETS 2 UNRESTRICTED T? :!L9st A? 8et :ssets est i;te! A? <?8@-te > !ebt. &''%''' &''%''' )&%''' )&%'''

1&3

C*; 7/ #olutions/ 7-' 7ContCd9 CITY OF TEMPLETON - WATER UTILITY FUND GENERAL LEDGER (NOT REQUIRED) BAL. (1) (") (') CASH 100,000 %00,000 1%,000(11) #'!,000(1#) (1$) DUE FROM GENERAL FUND (&) BAL. (#) (1&) SERVICE__ (1$) 100,000 BAL. ' ',000 (") %,000 ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT PROGRESS_ (1 ) #$,0%0 ACCOUNTS PAYABLE (10) !00,000 BAL. (#) (1&) CUSTOMER DEPOSITS (!) (') 1%,000 %00 (1!) (1!) NET ASSETS * RESTRICTED FOR REPAYMENT OF LT NOTES (1$) 100,000 (1!) #$,0%0 %,000 %00,000 '',000 !0",000 $,000 LONG-TERM NOTES PAYABLE___ (1) %00,000 N.A.* INVESTED IN CAPITAL ASSETS BAL. ' ',000 (1!) &'$,000 ( ) #0,000 "",000 !!,000 $,000 CASH(REPAYMENT OF LONG-TERM NOTES UTILITY PLANT IN (') (%) &!,000 CASH(CUSTOMER DEPOSITS___ !#,000 (!) (11) 1%,000 %00 MATERIALS AND SUPPLIES ( ) (10) %00 #0,000 100,000 !,000 !00,000 CUSTOMER ACCOUNTS RECEIVABLE_ BAL. "#,000 ($) !,000 (&) "& ,000 (') #"0,000 ACCUMULATED PROVISION FOR UNCOLLECTIBLE ACCOUNTS____ ($) !,000 BAL (1") & ,000 ",& 0

CONSTRUCTION WOR) IN (#) (1%) &%$,000 #0,000 MISCELLANEOUS ACCRUALS____ !,000 BAL. !,000

NET ASSETS - UNRESTRICTED__ (1$) 100,000 BAL. $1,000 (1!) &'$,000 (1!) (1!) (1!) 1"&,1&0 #$,0%0 %,000 %00,000

SALES OF WATER____________

(1!)

1&4

(1!)

"$ ,000

(&)

"$ ,000

1&&

C*; 7/ #olutions/ 7-' 7Cont8d9 SOURCE OF SUPPLY E+PENSES (#) (%) (#) (1") & ,000 10,!00 CUSTOMER ACCOUNTS E+PENSES '&,000 ",& 0 ADMINISTRATIVE AND GENERAL E+PENSES (#) $",000 (1!) $",000 (#) (%) DEPRECIATION E+PENSE (1 ) #$,0%0 (1!) #$,0%0 (") (1!) '',& 0 (1!) # ,!00 (#) (%) (#) (%) PUMPING E+PENSES______ #0,%00 ",%00 WATER TREATMENT E+PENSES____ %1,%00 &#,%00 E+PENSES_________ "!,000 & , 00 OF UTILITY PLANT____ 10,000 (1!) 10,000 (1!) 100, 00 (1!) !",000 (1!) #$,000

TRANSMISSION AND DISTRIBUTION

LOSS FROM DISPOSITION

INTEREST ON LONG-TERM DEBT (1 ) #0,000 (1!) #0,000 (1!) OTHER INTEREST E+PENSE________ (11) %00 (1!) %00

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION____ #0,000 (1%) #0,000

1&%

C*; 7/ #olutions/ 7-' 7Cont8d9

b.

CIT( OF TEM$LETON WATER UTILIT( FUND STATEMENT OF NET ASSETS JUNE 3'% )''&

ASSETS1 CURRENT AND ACCRUED ASSETS1 CAS* CUSTOMER ACCOUNTS RECEIVA/LE (8et) DUE FROM GENERAL FUND MATERIALS AND SU$$LIES RESTRICTED ASSETS-CAS* UTILIT( $LANT1 UTILIT( $LANT IN SERVICE ACC. $ROVISION FOR DE$RECIATION UTILIT( $LANT NET CONSTRUCTION WORO IN $ROGRESS NET UTILIT( $LANT TOTAL ASSETS LIABILITIES1 CURRENT AND ACCRUED LIA/ILITIES1 ACCOUNTS $A(A/LE LIA/ILITIES $A(A/LE FROM RESTRICTED ASSETS1 CUSTOMER DE$OSITS LONG-TERM DE/T TOTAL LIA/ILITIES NET ASSETS1 INVESTED IN CA$ITAL ASSETS% 8et ?A e<:te! !ebt RESTRICTED FOR RE$A(MENT OF L-T NOTES UNRESTRICTED TOTAL NET ASSETS
C*; 7/ #olutions/ 7-' 7Cont8d9

3 "..%&'' "+7%,-' )%''' 77%''' 3 .)"%"-' ""&%&'' +'.%''' .7%'&' -&,%+&' 3+7%''' "%)&3%+&' "%7+'%,3'

"")%''' "&%&'' &''%''' ,)7%&'' 7&3%+&' "''%''' 3'+%"-' 3 "%",3%"3'

1&7

c.

CIT( OF TEM$LETON WATER UTILIT( FUND STATEMENT OF REVENUES% E#$ENSES% AND C*ANGES IN NET ASSETS FOR T*E (EAR ENDED JUNE 3'% )''&

UTILIT( O$ERATING REVENUE1 SALES OF WATER O$ERATING E#$ENSES1 SOURCE OF SU$$L( E#$ENSES $UM$ING E#$ENSES WATER TREATMENT E#$ENSES TRANSMISSION AND DISTRI/UTION E#$ENSES CUSTOMER ACCOUNTS E#$ENSE ADMINISTRATIVE AND GENERAL E#$ENSES DE$RECIATION E#$ENSE TOTAL O$ERATING E#$ENSES UTILIT( O$ERATING INCOME OT*ER INCOME AND DEDUCTIONS1 LOSS FROM DIS$OSITION OF UTILIT( $LANT INTEREST ON LONG-TERM DE/T OT*ER INTEREST C*ARGES TOTAL OT*ER INCOME AND DEDUCTIONS C*ANGE IN NET ASSETS TOTAL NET ASSETS% 75"5)''. TOTAL NET ASSETS% ,53'5)''& "'%''' .'%''' &'' "'%&'' ",3%"3' "%'''%''' 3"%",3%"3' 3 .)%-'' .7%''' -,%''' "''%)'' ++%3)' 7,%''' .7%'&' .+-%37' "73%,3' 3 ,7)%'''

ALLOW. FOR FUNDS USED DURING CONSTRUCTION (.'%''')

1&'

C*; 7/ #olutions/ 7-' 7Cont8d9

d.

CIT( OF TEM$LETON WATER UTILIT( FUND STATEMENT OF CAS* FLOWS FOR T*E (EAR ENDED JUNE 3'% )''&

CAS* FLOWS FROM O$ERATING ACTIVITIES1 CAS* RECEIVED FROM CUSTOMERS (NOTE A) CUSTOMER DE$OSITS RECEIVED CAS* $AID TO EM$LO(EES FOR SERVICES CAS* $AID TO SU$$LIERS (NOTE /) NET CAS* $ROVIDED /( O$ERATIONS CAS* FLOWS FROM CA$ITAL AND RELATED FINANCING ACTIVITIES1 $ROCEEDS OF LONG-TERM NOTES SALE OF UTILIT( $LANT UTILIT( $LANT CONSTRUCTION IN $ROGRESS (INCLUDING 3.'%''' CA$ITALISED INTEREST) NET CAS* $ROVIDED /( CA$ITAL AND RELATED FINANCING ACTIVITIES NET INCREASE IN CAS* AND CAS* EQUIVALENTS CAS* AND CAS* EQUIVALENTS% JUL( "% )''. CAS* AND CAS* EQUIVALENTS% JUNE 3'% )''& ""-%''' ",'%''' "''%''' 3 ),'%''' (3+7%''') &''%''' "&%''' 3 .+-%''' "&%''' (3"'%''') (","%''') .)%'''

RECONCILIATION OF CAS* AND CAS* EQUIVALENTS TO T*E /ALANCE S*EET END OF (EAR CAS* AND CAS* EQUIVALENTS IN CURRENT AND ACCRUED ASSETS RESTRICTED CAS* AND CAS* EQUIVALENTS TOTAL CAS* AND CAS* EQUIVALENTS 3"..%&'' ""&%&'' 3),'%''' /EGINNING OF (EAR 3"''%''' -'3"''%'''

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RECONCILIATION OF NET O$ERATING INCOME TO NET CAS* $ROVIDED /( O$ERATING ACTIVITIES UTILIT( O$ERATING INCOME ADJUSTMENTS1 DE$RECIATION E#$ENSE INCREASE IN ACCOUNTS $A(A/LE INCREASE IN CUSTOMER DE$OSITS RECEIVED DECREASE IN MISC. O$ERATING ACCRUALS INCREASE IN INVENTORIES INCREASE IN INTERFUND RECEIVA/LES INCREASE IN NET CUSTOMER ACCOUNTS RECEIVA/LE TOTAL ADJUSTMENTS NET CAS* $ROVIDED /( O$ERATING ACTIVITIES (",&%,-') ("3"%,3') 3 .)%''' 3 .7%'&' "3%''' "&%''' ()-%''') (""%''') ()%''') 3 "73%,3'

NOTE A1 GiCe8 bE $RO/LEM 7--% E8t E +. NOTE /1 $RO/LEM 7--% ENTR( ) (3)-%''')% $LUS ENTR( "' (3-''%''')% MINUS CONSTRUCTION WORO IN $ROGRESSENTR( . (33&7%''')R MINUS 33"'%''' GIVEN AS CAS* $AID FOR WAGES AND SALARIES M 3","%'''. e. T7e 9ti<itE e: 8e! ?De :ti8@ i8;?>e is :b?9t )&.-. De ;e8t ?A ?De :ti8@ eCe89eR t7is :DDe: s t? be s?>eF7:t 7i@7 :s : :te ?A et9 8 ?8 s:<es% b9t it :>?98ts t? ?8<E +.7' De ;e8t ?8 t?t:< :ssets% ? "7.3, De ;e8t ?8 ;?8t ib9te! eG9itE. /e;:9se t7e ;itE 7:s ?De :te! t7e 9ti<itE A? ?8<E ?8e Ee: % it >:E 8?t 7:Ce D eD: e! : ;?st ?A se Ci;e st9!E. S9;7 : st9!E is 8ee!e! i8 ? !e t? !ete >i8e :8 eG9it:b<e :te st 9;t9 e. Si>i<: <E% st9!ies ?A t7e ;?8!iti?8 ?A t7e 9ti<itE D<:8t :8! its ;:D:bi<itE t? >eet A? e;:st 8ee!s ?A t7e ;?>>98itE >9st be >:!e% iA t7eE 7:Ce 8?t Eet bee8% be;:9se it >:E eG9i e seCe :< Ee: s t? !eCe<?D :8! Ai8:8;e 8eF s9DD<E% t e:t>e8t% D9>Di8@% st? :@e% :8! !ist ib9ti?8 A:;i<ities.

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