Question

Facts:

The City of Duluth teamed with a professional football franchise to offer one day “Learn to Play Football” clinics for kids during the summer. The City provided the Town Green as a location, and the franchise covered all costs.

1,500 kids registered for the Duluth clinics during 2018. The franchise contributed upfront $100 per registered child to the city to cover expenses. Each child attending received a replica jersey of the team.

The city also had a four-year loan from the bank for $24,000 at a 7% interest rate.

Cash disbursements occurred for wages of clinic workers and on-site medical staff in the amount of $31,000, advertising and promotional items $40,000, payroll taxes $9,300, insurance $10,000, equipment rentals $12,800, interest on banknote paid semi-annually $840, landscaping repairs and clean up services $6,700, refreshments, $20,400, and parking for volunteers $2,300. All disbursements occurred at year end except $5,000 of wages and $1,500 of payroll taxes.

Please respond in Word to the following exercise:

1. articulate the differences in cash flow statements required under GASB standards when compared with cash flow statements required by FASB standards. Provide specific examples of the differences.

Using the fact scenario below, please respond in Excel to the following exercises:

2. Prepare the journal entries to record revenues and disbursements if the city treats the program as an enterprise fund.
3. Prepare the journal entries to record revenues and disbursements if the city treats the program as a special revenue fund.

Answer 1

1. Prepare joumal entries, if City treats as a enterprises fund: Account Titles and Explanation Debit Credit Cash $150,000 Fees revenue (1500 kids x $100) (To record fees revenue) $150,000 Wages to staff ($31,000 - $5,000) Advertising and promotional expense Payroll taxes ($9,300 - $1,500) Insurance expense Equipment Rental Interest on Bank Note Landscapping & Repair Expense Refreshment expense Parkig Expense $26,000 $40,000 $7,800 $10,000 $12,800 $840 $6,700 $20,400 $2,300 Cash $126,840 (To record disbursement)

$134,180 Fees revenue Wages to staff Advertising and promotional expense $26,000 $40,000 $7,800 Payroll taxes Insurance expense Equipment Rental $10,000 $12,800 $840 Interest on Bank Note Landscapping & Repair Expense Refreshment expense Parkig Expense $6,700 $20,400 S2,300 wages to staff Outstanding payroll taxes Outstanding interest on loan S5, $1,500 Outstand $840 2. Prepare joumal entries, if City treats as a Special Revenue fund:

Account Titles and Explanation Debit Credit |S150,000 Cash Fees revenue (1500 kids x $100) (To record fees revenue) $150,000 Fees revenue Special Revenue Fund (To record transfer of fees revenue) $150,000 $150,000 Wages to staff ($31,000 - $5,000) Advertising and promotional expense Payroll taxes ($9,300 - S1,500) Insurance expense $26,000 $40,000 $7,800 $10,000 $12,800 Equipment Rental Interest on Bank Note Landscapping & Repair Expense Refreshment expense Parkig Expense $840 $6,700 $20,400 $2,300 Cash $126,840 (To record disbursement)

Wages to staff Payroll taxes Interest on Bank Note $5,000 $1,500 $840 Outstanding wages to staff Outstanding payroll taxes $5,000 $1,500 $840 Outstanding interest on loan (To record accrued expense recorded)