Question 1. Prepare a statement of activities and a statement of net position. Question 2. Two parts: Prepare journal entries to record the transactions and then the second part is to prepare the statement of financial position and the statement of activities for the year ended February 28, 2025. Question 3. Prepare a worksheet showing the adjustments and the adjusted trial balance for the partnership on the accrual basis at December 31, 2024. All adjustments affecting income should be made directly to partners’ capital accounts.
7-1 Project Three WileyPLUS Question Set
Question 1 of 3
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Vaughn issued an 9%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,764,431 cash from the bond issuance on January 1, 2025. The bond yield is 11%. Interest is paid annually on December 31 of each year. Disclosure information about capital assets is reported below.
Disclosure of Information about Capital Assets
for the Year Ending December 31, 2025
Primary Government
Governmental Activities
Beginning
Balance
Land
$500,000
Building
760,000
Machinery and Equipment
950,000
Additions
$500,000
760,000
$(225,000)
Construction in Progress
$1,510,000
Infrastructure
Ending
Balance
Retirements
725,000
1,510,000
450,000
Totals at historical cost
450,000
$2,660,000
$1,510,000
(191,000)
(58,750)
$(225,000)
$3,945,000
Less accumulated depreciation
Building
Machinery and Equipment
139,000
(171,650)
(50,000)
(34,100)
$(476,000)
(235,000)
$(168,500)
$139,000
$(505,500)
$2,184,000
$1,341,500
$(86,000)
$3,439,500
Infrastructure
Total accumulated depreciation
Governmental activities capital
assets, net
(249,750)
(75,650)
(84,100)
Depreciation expense charged to governmental activities as follows:
Public Safety
$55,000
General Government
72,000
Highways and Streets
24,000
Sanitation
17,500
$168,500
Vaughn’s governmental funds financial statements are as follows:
Vaughn
Governmental Funds
Fund Balance Sheets at December 31, 2025
Capital
Projects
Fund
Debt
Service
Fund
Monorail
Fund
Term Bond
Fund
Total
Governmental
Funds
Assets
General
Fund
Cash
$65,000
$301,000
11,000
3,000
14,000
98,000
1,255,000
98,000
1,451,000
$101,000
$2,021,000
Interest Receivable
Investments
Property Tax Receivable
190,000
Total Assets
$353,000
$1,567,000
Vouchers Payable
$72,000
$49,000
Total Liabilities
$72,000
$49,000
$—
$366,000
190,000
Liabilities and Fund Balance
$121,000
$—
$121,000
Fund Balances:
Restricted for:
Capital projects
1,518,000
1,518,000
Debt Service
Assigned for encumbrance
193,000
Unassigned
88,000
Total Fund Balance
281,000
Total Liabilities and Fund
Balances
$353,000
101,000
101,000
1,518,000
101,000
1,900,000
$1,567,000
$101,000
$2,021,000
193,000
88,000
Vaughn
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund
Balances for the Year Ended December 31, 2025
General
Fund
Capital
Projects
Fund
Debt
Service
Fund
Monorail
Fund
Term Bond
Total
Governmental
Funds
Revenues
Property Taxes
$525,000
Licenses and Permits*
150,000
State Grant—highways and streets
250,000
$50,000
$575,000
150,000
$1,000,000
250,000
Intergovernmental—state grant
1,000,000
Charges for Services (general
government)
130,000
Investment Earnings
Total Revenue
130,000
75,000
$1,130,000
75,000
$1,000,000
$50,000
$2,180,000
Expenditures
Public Safety
$500,000
$500,000
General Government
300,000
300,000
Highways and Streets
130,000
Sanitation
70,000
130,000
70,000
Debt Service Interest
Capital Outlay
Total Expenditures
Excess (deficiency) of
revenues over expenditures
$180,000
180,000
$1,510,000
1,510,000
$1,000,000
$1,510,000
$180,000
$2,690,000
$130,000
($510,000)
($130,000)
($510,000)
Other Financing Sources (Uses)
Proceeds from long-term
capital debt
$1,764,431
$1,764,431
Transfers in
Transfers out
$(180,000)
Total other
$(180,000)
$180,000
180,000
$1,764,431
$180,000
$1,764,431
1,369,431
(180,000)
Special Items
Proceeds from sales of equipment
$115,000
$115,000
Net change in fund balance
65,000
1,254,431
50,000
Fund balance—beginning
189,000
263,569
78,000
530,569
Fund balance—ending
$254,000
$1,518,000
$128,000
$1,900,000
* Revenues from licenses and permits are assigned to highways and streets ($100,000) and to the general government ($50,000).
Using the information above, prepare the statement of activities and the statement of net position on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Position is $2,714,569. (Round answers to 0 decimal places. e.g. 5,125.)
Vaughn
Statement of Activites -Government-Wide
For the Year Ended December 31, 2025
Net (Expense) Revenue
and Changes in Net
Position
Program Revenues
Functions/Programs
Charges for
Services
Expenses (a)
Primary Government
Grants and
Contributions
Governmental
Activities
Primary Government
Governmental Activities
$
$
$
$
$
$
$
$
Vaughn
Statement of Net Position – Government-Wide Basis
At December 31, 2025
Statement
of Net Position
Governmental
Funds
Total
Government
Activities
Adjustments
Assets
$
$
$
$
$
Liabilities and Fund Balance
$
$
$
$
$
Net Position
$
Total
List of Accounts
Accounts Receivable
Accumulated Depreciation
Administrative Expenses
Advance from Electric Utility Fund
Allowance for Uncollectible Taxes
Amount Held for Debt Service
Appropriations
Billing to Departments
$
$
$
$
Assistance Used
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Capital Assets
Cash
Certificate of Deposit
Computer Service
Contracts Payable
Contracts Payable – Retained Percentage
Contribution from General Fund
Contribution from Property Owners
Contribution from General Obligation Bond
Cost of Service
Customer Deposit Agency Fund Balance
Deposit on Land Contract
Depreciation Expense
Due from City Park Fund
Due from Debt Service Fund
Due from Electric Utility Fund
Due from General Fund
Due from Internal Service Fund
Due from Special Revenue Fund
Due from State Revenue Department
Due from Water Utility Fund
Due to City of Midvale
Due to City Park Fund
Due to County Government – Taxes
Due to Enterprise Fund
Due to General Fund
Due to Governmental Units
Due to Internal Service Fund
Due to Special Revenue Fund
Due to State Government
Due to Unified School District
Due to Utility Fund
Encumbrances
Endowment Fund Principal Balance
Equipment – Hardware
Equipment – Protection
Estimated Revenues
Estimated Uncollectible Taxes
Excess of Billings to Departments over Costs
Expenditure
Expenditure – Prior Year
Expenditures – Interest
Expenditures – Principal
Fund Balance
Fund Balance – Assigned
Fund Balance – Unassigned
Fund Principal Balance
Gain on Sale
Gain On Sale of Equipment
General Government
General Property
Highways And Streets
Interest Expense
Interest Income
Interest on Long-term Debt
Interest Receivable
Inventory
Investment Earnings
Investment in Capital Assets
Investment in General Fixed Assets
Investments
Land
Long-term Liabilities
Loss on Sale
No Entry
Payables
Property Tax Receivable
Property Tax Receivable – Delinquent
Property Tax Revenue
Public Safety
Receivables
Required Additions
Required Earnings
Restricted for Debt Service
Revenue
Revenue from Asset Sale
Revenue from Donations
Sanitation
Scrap Sales
Special Assessment Receivable
Special Assessment Revenue
Taxes Receivable
Taxes Revenue
Transfer from Capital Projects Fund
Transfer from Enterprise Fund
Transfer from General Fund
Transfer from Permanent Fund
Transfer from Special Revenue Fund
Transfer from Trust Fund
Transfer to Capital Projects Fund
Transfer to Debt Service Fund
Transfer to General Fund
Transfer to Internal Service Fund
Transfer to Special Revenue Fund
Unrestricted Net Position
Vouchers Payable
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7-1 Project Three WileyPLUS Question Set
Question 2 of 3
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Sheridan Library, a nonprofit organization, presented the following statement of financial position and statement of activities for its fiscal year ended February 28, 2024.
Sheridan Library
Statement of Financial Position
February 28, 2024
Assets
Unrestricted
Temporarily
Restricted
$ 280,000
$87,000
Current Assets
Cash
Grants Receivable
78,000
Prepaid Expenses
60,000
Total
418,000
Investments (at market)
1,030,000
Land, Building, and Equipment
(less accumulated depreciation of $63,861)
528,000
$1,976,000
Total Assets
$87,000
Liabilities and Fund Balances
Current Liabilities
Accounts Payable and Accrued Expenses
$139,000
Total
139,000
Long-Term Debt
197,000
Fund Balances
Total Liabilities and Fund Balances
1,640,000
87,000
$1,976,000
$87,000
Sheridan Library
Statement of Activities
for Year Ended February 28, 2024
Support and Revenue
Unrestricted
Temporarily
Restricted
Support
Grants
$66,000
$—0—
Gifts
327,000
87,000
Total
393,000
87,000
Revenue
Service Fees
20,000
Book Rentals and Fines
109,000
Investment Income
69,000
Total
Total Support and Revenue
198,000
—0—
$ 591,000
$87,000
Expenses
Program Services
Circulating library
$ 217,000
Research library
86,000
Exhibits
22,000
Community services
11,000
Total
336,000
—0—
Supporting Services
General and administrative
168,000
Fund raising
116,000
Total
284,000
Total Expenses
—0—
620,000
Increase (decrease) in net assets
—0—
(29,000)
87,000
Fund Balances—beginning of year
1,669,000
—0—
Fund Balances—end of year
$1,640,000
$87,000
The following transactions occurred during the fiscal year ended February 28, 2025.
1. Fees were billed as follows:
Service fees
$28,640
Book rentals
42,030
Book fines
75,080
2. $40,300 of the Grant Receivable was received. Another grant in the amount of $20,640 was promised.
3. Contributions in the amounts summarized below were received:
Unrestricted
$234,150
Restricted
104,920
4. Investment income totaled $73,280 for the year.
5. Vouchers for the year were approved as follows:
Circulating library
$191,540
Research library
77,800
Exhibits
15,470
Community services
11,330
General and administrative
166,810
Fund raising
110,940
Total
$573,890
6. During the year, $477,200 worth of vouchers were paid.
Adjustment Data
7. Accounts Payable and Accrued Expenses at February 28, 2025, should be $244,040. The difference should be allocated to the following expenses:
Research library
$5,140
General and administrative
3,210
8. Additions to the research library in the amount of $69,920 that were approved in (5) above were made in accordance with the terms of a contribution that had been received earlier and that was restricted for that purpose.
9. The current market value of the investments is $1,044,250 (no investment transactions occurred).
10. Depreciation amounted to $8,861 for the year. It should be allocated as follows:
Circulating library
$3,450
Research library
2,862
General and administrative
2,549
11. Prepaid Expenses should be $55,014. The difference should be allocated to:
Exhibits
$3,745
General and administrative
1,241
(a)
Prepare journal entries to record the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. List all debit entries before credit entries.)
No. Account Titles and Explanation
Debit
Credit
1.
2.
(To record grant received)
(To record grant promised)
3.
4.
5.
6.
7.
8.
(To release funds from restricted
into unrestricted assets)
(To receive funds into unrestricted
from restricted assets)
9.
10.
11.
List of Accounts
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(b)
Prepare the statement of financial position and the statement of activities for the year ended February 28, 2025. (Enter negative amounts using either a negative sign preceding the number, e.g. -45 or parentheses, e.g. (45).)
SHERIDAN LIBRARY
Statement of Financial Position
Assets
Temporarily
Restricted
Unrestricted
$
$
$
$
$
$
Liabilities and Fund Balances
SHERIDAN LIBRARY
Statement of Activities
For Year Ended February 28, 2025
Without Donor
Restrictions
List of Accounts
Accounts Payable and Accrued Expenses
Accounts Receivable
Accumulated Depreciation
Allowance for Doubtful Accounts
Allowance for Doubtful Pledges
With donor
Restrictions
$
$
$
$
$
$
$
$
Assistance Used
Allowance
for Uncollectible
Loans
7-1 Project
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Annuity Payable
Question 2 of 3
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Assets Whose Use is Limited
Bad Debt Expense
Bank Loan
Book Rentals and Fines Revenue
Cash
Cash – Temporarily Restricted
Cash – Unrestricted
Circulating Library Expenses
Community Services Expenses
Construction in Process
Contributions – Gifts
Contributions – Restricted Support
Deferred Capital Additions
Deferred Revenue
Deferred Support
Donated Services
Due from Annuity Fund
Due from Endowment Fund
Due to General Fund
Due to Loan Fund
Due to Restricted Current Fund
Due to Specific Purpose Fund
Due to Unexpended Plant Fund
Due to Unrestricted Current Fund
Educational and General Expenses
Endowment Fund
Endowment Income
Excess of Restricted Receipts Over Transfers to Revenue
Excess of Revenue Over Expenses
Exhibits Expenses
Expenses
Fund Balance
Fund Balance – Term
Fund Raising Expenses
Gain from Operations
General and Administrative Expenses
General Fund
General Services Expense
Grants Receivable
Income from Board – Designated Funds
Interest Income
Interest on Deferred Tuition
Interest Receivable
Inventory
Investment in Common Stock
Investment in Savings Certificates
Investment in U.S. Treasury Bills
Investment Income
Investments
Land, Buildings, and Equipment
Loan Receivable
Long-term Debt
Loss from Operations
Mortgage Payable
Net Assets Released from Restrictions
Net Investment in Plant
No Entry
Operating Expenses
Other Assets
Other Fund Balance
Other Operating Revenue
Other Professional Services – Research
Patient Service Revenue
Plant Fund
Plant Replacement Fund
Pledges Receivable
Poetry Collection Expenses
Prepaid Expenses
Private Gifts and Grants
Provision for Uncollectible Pledges Expenses
Realized Gains on Investments
Research Library Expenses
Restricted Fund
Revenue
Scholarship Expenses
Service Fees Revenue
State Appropriation Receivable
State Appropriations Revenue
Support Revenue – Gifts
Support Revenue – Grants
Tuition and Fees Revenue
Unrestricted Current Fund Revenues
Unrestricted Fund
Unrestricted Gifts and Requests
Unrestricted Income from Endowment Funds
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7-1 Project Three WileyPLUS Question Set
Question 3 of 3
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The partnership of Waterway, Wildhorse, and Sheffield engaged you to adjust its accounting records and convert them uniformly to the accrual basis in anticipation of admitting Kerns as a new partner. Some accounts are on the accrual basis and some are on the cash basis. The partnership’s books were closed at December 31, 2024, by the bookkeeper, who prepared the general ledger trial balance that appears as follows:
Waterway, Wildhorse, and Sheffield
General Ledger Trial Balance
December 31, 2024
Debit
Cash
$13,500
Accounts Receivable
39,000
Inventory
32,800
Land
9,500
Buildings
45,400
Allowance for Depreciation of Buildings
Credit
$5,700
Equipment
53,100
Allowance for Depreciation of Equipment
5,400
Goodwill
4,800
Accounts Payable
49,500
Allowance for Future Inventory Losses
7,200
Waterway, Capital
37,600
Wildhorse, Capital
63,700
Sheffield, Capital
29,000
$198,100
Totals
$198,100
Your inquiries disclose the following:
1.
The partnership was organized on January 1, 2023. No provision was made in the partnership agreement for the allocation of partnership profits and losses. During 2023, profits were allocated equally among the partners. The partnership agreement was amended, effective January 1, 2024, to provide for the following profit and loss ratio: Waterway, 40%; Wildhorse, 40%; and Sheffield, 20%. The amended
partnership agreement also stated that the accounting records were to be maintained on the accrual basis and that any adjustments necessary for 2023 should be allocated according to the 2023 profit allocation agreement.
2.
The following amounts were not recorded as prepayments or accruals.
December 31
2024
2023
Prepaid insurance
$700
$900
Advances from customers
800
1,600
Accrued interest expense
—
500
The advances from customers were recorded as sales in the year the cash was received.
3.
In 2024, the partnership recorded a provision of $7,200 for anticipated declines in inventory prices. You convinced the partners that the provision was unnecessary and should be removed from the books.
4.
The partnership charged equipment purchased for $4,100 on January 1, 2024, to expense. This equipment has an estimated life of 10 years and an estimated salvage value of $500. The partnership depreciates its capitalized equipment using the declining balance method at twice the straight-line depreciation rate.
5.
The partners agreed to establish an allowance for doubtful accounts at 2% of current accounts receivable and 5% of past-due accounts. At December 31, 2023, the partnership had $58,900 of accounts receivable, of which only $4,300 was past due. At December 31, 2024, 20% of accounts receivable was past due, of which $4,300 represented sales made in 2023 and was considered collectible. The partnership
had written off uncollectible accounts in the year the accounts became worthless as follows:
Accounts Written Off In
2024
2023
2024 accounts
$700
—
2023 accounts
900
$300
6.
Goodwill was recorded on the books in 2024 and credited to the partners’ capital accounts in the profit and loss ratio in recognition of an increase in the value of the business resulting from improved sales volume. The partners agreed to write off the goodwill before admitting the new partner.
Prepare a worksheet showing the adjustments and the adjusted trial balance for the partnership on the accrual basis at December 31, 2024. All adjustments affecting income should be made directly to partners’ capital accounts. Supporting computations should be in good form. (Do not prepare formal financial statements or formal journal entries.) (Round answers to 0 decimal places, e.g. 5,125.)
Waterway, Wildhorse, and Sheffield Partnership
Adjusted Trial Balance
December 31, 2024
Unadjusted
Balance
Dr.
Save for Later
Adjusted
Balance 12/31/2024
Adjustment
Cr.
Dr
Cr
Dr.
Cr.
$
$
$
$
$
$
$
$
$
$
$
$
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