Accounting Assignment
(CAFR) that I used is The City of Cary, North Carolina.
Town of Cary NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDING JUNE 30, 2018.
Part 1
Review the Comprehensive Annual Financial Report (CAFR) that you have obtained.
1. How many capital projects funds does the government maintain? How can you tell? Are any of these major funds? If so, for what purposes are they maintained?
2. How many debt service funds does the government maintain? How can you tell? Are any of these major funds? If so, for what types of obligations are they maintained?
3. How are the capital projects and debt service funds reported in the government-wide statement of net position?
4. Select one of the more recently established (and larger) capital projects funds (a major fund, if there is one).
5. From where did the fund receive most of its resources?
Exercise 1
Capital projects funds account for construction expenditures, not for the assets that are being constructed.
The Wickliffe City Council authorizes the restoration of the city library. The project is to be funded by the issuance of bonds, a reimbursement grant from the state, and property taxes.
1. Prepare journal entries in the capital projects fund to reflect the following events and transactions:
1. The city approves (and gives accounting recognition to) the project's budget of $9,027,000, of which $6,000,000 is to be funded by general obligation bonds, $2,500,000 from the state, and the remaining $527,000 from the general fund. The city estimates that construction costs will be $8,907,000 and bond issue costs $120,000.
2. The city issues 9 percent, 15-year bonds that have a face value of $6,000,000. The bonds are sold for $6,120,000, an amount reflecting a price of $102. The city incurs $115,000 in issue costs; hence, the net proceeds are $6,005,000.
3. The city transfers the net premium of $5,000 to its debt service fund.
4. It receives the anticipated $2,500,000 from the state and transfers $527,000 from the general fund.
5. It signs an agreement with a contractor for $8,890,000.
6. It pays the contractor $8,890,000 upon completion of the project.
7. It transfers the remaining cash to the debt service fund.
2. Prepare appropriate closing entries.
Part 2
(CAFR) that I used is The City of Cary, North Carolina.
Review the comprehensive annual financial report (CAFR) you obtained.
1. Per the city's schedule of long-term obligations, what is the total long-term obligation for both governmental and business-type activities? Does this amount reconcile with the long-term liabilities as reported on the government wide statement of net position?
2. In addition to bonds payable, what other kinds of long-term debt for governmental activities did the city report in its statement of net position?
3. Did the city increase or decrease its long-term borrowings during the year? What was the effect on total long-term liabilities at year end? Explain.
4. What is the percentage of total net bonded debt to assessed value of property? What is the amount of net debt per capital?
5. What is the city's legal debt margin?
6. Does the city have any lease obligations outstanding? Are these accounted for as operating or financing leases? Can you determine if any of these leases were initiated during this year? What is the amount of payments related to financing leases?
7. Compute the total amount of the city's direct and overlapping debt?
8. Does the city have outstanding any conduit debt?
Exercise 2
Governments now report their effective liabilities and interest costs, but do not adjust for changes in market values or rates.
On January 1, a public-school district issued $6 million of 6 percent, 15-year coupon bonds to finance a new building. The bonds, which require semiannual payments of interest, were issued for $6,627,909-a price that provides an annual yield of 5 percent (a semiannual yield of 2.5 percent).
1. Prepare the journal entry that the district would make to reflect the issuance of the bonds on its government-wide statements. Comment on why the net reported liability differs from the face value of the bonds.
2. Prepare the entry that the district would make to reflect the first payment of interest on its government-wide statements. Indicate the value at which the bonds would be reported immediately following the payment. Comment on why the reported interest expense is not equal to the amount paid.
3. Suppose that immediately following the first payment of interest, prevailing interest rates fell to 4 percent. For how much could the district liquidate its obligations by acquiring all outstanding bonds in the open market? [Hint: Determine the present value (based on the prevailing interest rate of 2 percent per period) of the remaining 29 coupon payments of $180,000 and the repayment of the $6 million of principal.] Comment on whether this amount would be reported in the district's financial statements (both fund and government-wide). Comment also on why and how this amount might be of interest to statement users.
4. Comment on how the district would report both the liability and interest costs in its fund statements.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.