Trust Activities and Fund Issues
Exercise 1
A concerned citizen provides resources and establishes a trust with the local government. What factors should be considered in determining which fund to report the trust activities?
Exercise 2
The citizen of Spencer County approved the issuance of $ 2,000,000 in 6% general obligation bonds to finance the construction of a courthouse annex. A capital project fund was established for that purpose. The preclosing trial balance of the courthouse annex capital project fund follows:
Trial Balance-December 31, 2015
Debits Credits
Cash $900,000
Contract payable $550,000
Due from State Government 200,000
Encumbrances 85,000
Expenditures-Capital 1,850,000
Intergovernmental grant 400,000
OFS: premium on bonds 45,000
OFS: proceeds sale of bonds 2,000,000
Budgetary fund balance-
Reserve for encumbrances 85,000
Transfer out 45,000
$3,080,000 $3,080,000
REQUIRED:
a. Prepare any closing entries necessary at year-end.
b. Prepare a Statement of Revenues, Expenditure, and Changes in Fund Balance for the courthouse annex capital project fund.
c. Prepare a balance sheet for the Courthouse Annex Capital Project Fund, assuming all unexpended resources are restricted to construction of the courthouse annex.