Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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The City of Bainland has been undergoing financial difficulties because of a decrease in its tax base caused by corporations leaving the area. On January 1, 2017, the city has a fund balance of only $400,000 in its governmental funds. In 2016, the city had revenues of $1.4 million and expenditures of $1.48 million. The city's treasurer has forecast that, unless something is done, revenues will decrease at 2 percent per year while expenditures will increase at 3 percent per year.
Required
Create a spreadsheet to predict in what year the government will have a zero fund balance.
One proposal is that the city slash its expenditures by laying off government workers. That will lead to a 3 percent decrease in expenditures each year rather than a 3 percent increase. However, because of the unemployment, the city will receive less tax revenue. Thus, instead of a 2 percent decrease in revenues, the city expects a 5 percent decrease per year. Adapt the spreadsheet created in requirement (1) to…
The following transactions relate to Newport City’s special revenue fund. In 2020, Newport City created a special revenue fund to help fund the 911 emergency call center. The center is to be funded through a legally restricted tax on cellular phones. No budget is recorded. During the first year of operations, revenues from the newly imposed tax totaled $495,000. Of this amount, $445,500 has been received in cash and the remainder will be received within 60 days of the end of the fiscal year. Expenditures (salaries) incurred through the operation of the 911 emergency call center totaled $441,000. Of this amount, $412,335 was paid before year-end. During the year the state government awarded Newport City a grant to reimburse the City’s costs (not to exceed $159,000) for the purpose of training new 911 operators. During the year, the City paid $151,050 (not reflected in the expenditures above) to train new operators for the 911 emergency call center and billed the state government.…
The following transactions relate to Newport City’s special revenue fund.
In 2020, Newport City created a special revenue fund to help fund the 911 emergency call center. The center is to be funded through a legally restricted tax on cellular phones. No budget is recorded.
During the first year of operations, revenues from the newly imposed tax totaled $530,000. Of this amount, $477,000 has been received in cash and the remainder will be received within 60 days of the end of the fiscal year.
Expenditures (salaries) incurred through the operation of the 911 emergency call center totaled $469,000. Of this amount, $438,515 was paid before year-end.
During the year the state government awarded Newport City a grant to reimburse the City’s costs (not to exceed $180,000) for the purpose of training new 911 operators. During the year, the City paid $171,000 (not reflected in the expenditures above) to train new operators for the 911 emergency call center and billed the state government.…
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- The town council of Riverside estimated revenues for 2020 to be $685,000 from property taxes and $165,000 from business licenses. The appropriations budget from the council was as follows: General government $ 395,000 Parks and recreation 110,000 Sanitation 90,000 Streets and sidewalks 160,000 In April, heavy spring rains caused some flooding near the river. As a result, a picnic area at River’s Edge Park was ruined and several damaged shops had to shut down. The council adopted an upward revision of $50,000 for the parks and recreation budget and reduced the estimated revenues from business licenses by $30,000.The General Fund began the year with a balance of $49,000. During the year, tax collections totaled $687,500 and revenues from business licenses were $124,000. Expenditures were $365,000 for general government, $160,500 for parks and recreation, $91,600 for sanitation, and $157,333 for streets and sidewalks. There are no outstanding encumbrances at…arrow_forwardThe following transactions relate to Newport City's special revenue Fund. 1. In 2020, Newport City created a special revenue fund to help the 911 emergency call center. the center is to be funded through a legally restricrted tax on cellular phones. No budget is recorded. 2. During the first year of operations, revenues from the newly imposed tax totaled $489,000. Of this amount $444,000 has been received in cash and the remainder will be received within 60 days of the end of the fiscal year.. 3. expenditures (salaries) incurred through the operation of the 911 emergency call center totaled $449,000. Of this amount $422,000 was paid before year-end. 4. During the year the state government awarded Newport City a grantto reimburse the city's cost ( not to exceed $150,000) for the pupose of training new 911 operators. During the year, the city paid $146,500 ( not relfected inthe expenditures above) to trian new operators for the 911 emergancy call center and billed the state government.…arrow_forwardA city has only one activity, its school system. The school system is accounted for within the general fund. For convenience, assume that, at the start of 2017, the school system and the city have no assets. During the year, the city assessed $400,000 in property taxes. Of this amount, it collected $320,000 during the year, received $50,000 within a few weeks after the end of the year, and expected the remainder to be collected about six months later. The city makes the following payments during 2017: salary expense, $100,000; rent expense, $70,000; equipment (received on January 1 with a five-year life and no salvage value), $50,000; land, $30,000; and maintenance expense, $20,000. In addition, on the last day of the year, the city purchased a $200,000 building by signing a long-term liability. The building has a 20-year life and no salvage value, and the liability accrues interest at a 10 percent annual rate. The city also buys two computers on the last day of the year for $4,000…arrow_forward
- The City of Troy collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, the city estimated that it will require $2,500,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $770,000 of cash on hand and $830,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and from delinquent property taxes, including interest and penalties, were estimated at $1,100,000. Required a. Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 6 percent per annum to a local bank. Record the issuance of the tax anticipation notes in…arrow_forwardThe City of Weston is preparing its budget for calendar year 2013. After estimating revenues from all other sources, the City calculates that it must raise $8,000,000 from property taxes. You are given the following information regarding the tax rate: Property taxes to be collected $8,000,000 Estimated uncollectible property taxes $50,250 Total assessed value of property at beginning of 2013 $95,000,000 Expected reduction in assessed value from appeals $200,000 Assessed value of City property, not subject to tax $1,200,000 Adjustments to assessed values for senior citizen exemptions $1,000,000 Required: Compute the gross amount of property taxes required to be levied. Compute the tax rate per $100 of net assessed valuation. Determine the amount of property…arrow_forwardThe City of Iroy collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, the city estimated that it will require $1,800,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $700,000 of cash on hand and $760,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and from delinquent property taxes, including interest and penalties, were estimated at $750,000. Required a. Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 7 percent per annum to a local bank. Record the issuance of the tax anticipation notes in the…arrow_forward
- The city decided to reduces taxes over the next two years. they will reduced taxes 2% the first year and 3% the second year. What will be the total percent reduction in taxes? Do not round the final answer?arrow_forwardQuestion: The city of San Fernando operates on a calendar year basis. John Perez, the governor, is particularly proud of his reputation for making sure the state lives within its means. He knows that revenues in 2018 are coming in at a slower pace than anticipated, and he fears that expenditures may exceed revenues for the first time in his tenure as governor. He seeks advice from his budget director, who says: “No problem. I’ll just tell the agencies not to send invoices for utilities, travel expenses, and professional services to the comptroller during November and December for payment. Because the state uses the modified accrual basis of accounting, the comptroller won’t charge the bills to 2018.” The elected state comptroller is responsible not only for paying the bills but also for preparing financial statements in accordance with GAAP. What should the comptroller do when he learns about the budget director’s idea?arrow_forwardThe municipality of Smallville has arranged to borrow $30 million in order to implement several public projects (flood control, school security, etc.). The interest rate will be 3% per year, payable at the end of each year. This $30 million debt will be retired by making payments of $5 million at the end of each year. The Board of Supervisors is concerned that it will take too long to pay off this debt. How many years will it take to retire this $30 million debt and its associated interest payments?arrow_forward
- Lilly County, faced with the prospect of declining revenues, decides it can save money by doingall printing in-house. The county creates the Lilly Printing Fund (an Internal Service Fund),directs departments to fulfill their bulk printing needs through that Fund, and directs departmentsto pay the Fund promptly to minimize its operating cash flow needs.The Fund had the following transactions and events during 2021:1. Received a $12,000 loan on January 2 from the county’s General Fund to be repaid in fourequal annual installments of $3,000, starting December 31, 2021, with interest at the rateof 1 percent per annum on the outstanding balance. The specified purpose of the loan is toallow the Lilly Printing Fund to purchase equipment for $9,600 and to use the balance of $2,400to meet operating cash flow needs.2. Purchased reproduction equipment for $9,600 on January 2, using cash provided.The equipment has an estimated useful life of 4 years.3. Purchased paper and supplies for $9,000 on…arrow_forwardFor the Fiscal Year 2017, Twin City levied $60 million in property Taxes. Its past experience dictates that 10% of taxes will not be collected. A. Required: Prepare the general Journal entries to record the property levy using the following account titles: Property Taxes Receivable, Estimated Property Taxes Uncollectible and Revenue from Property Taxes (Control). B. On June 30, 2017 the City had collected $30 million of property taxes levied. Required: Prepare General Journal entries to record the receipt of this amount. c. On November 30, the City collected $25 million of property taxes levied. Required: Prepare the general journal entries to record the receipt of the taxes. D. What adjustment should the City make about the estimate of uncollectible account at the year end? E. How much is the delinquent of property taxes receivable at the end of the year? Show computation.arrow_forward2. Crystal City want to complete its operation for the fiscal year 2014 and it will finance its operation by using tax anticipation notes. The notes are paid upon the collection of property taxes. On May 1, 2014, the City estimated that it will require $2,590,000 to finance governmental activities for the remainder of the 2014 fiscal year. On that date it had cash on hand $940,000 and $700,000 of current liabilities. In addition, on the same year the city will collect revenue from interest and penalties, were estimated$ 1,850,000. Required: Ccalculate the estimated amount of tax anticipation financing that will be required for the remainder of FY 2014. Show work in good form.arrow_forward
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