In: Accounting
City of Jonesboro hosts events at the historic drive-in theatre and uses the parking spaces for parking for downtown patrons. Currently it is set up as an enterprise fund and has no long-term debt. Machinery and equipment are the only capital assets recorded by the drive-in theatre. The building is used for rental space for local business owners and all operation and maintenance services are provided by the city. Your company was hired to complete the audit for the City of Jonesboro. Evaluate the following transactions to determine if the Drive-In Theatre Fund should be recognized as an enterprise fund under GASB standards. What are your concerns, if any, about the reporting for the City of Jonesboro? Provide support for your conclusions.
The drive-in theatre building generates rental income of $94,444, which was accrued and cash was received in the amount of $90,210.
Expenses paid in cash were reported as follows: administrative services, $25,205; maintenance and repairs, $72,882; supplies and materials, $7,792; and utilities, $30,124.
Transfer of funds from the General Fund to the Drive-In Theatre Fund totaled $60,000.
Depreciation adjustments and adjustments for uncollectible accounts were respectively: $3,519 and $667. All nominal accounts were closed at the end of the period.
Prepare general journal entries to record the Drive-In Theatre Fund’s operating activities for the year.
Prepare a statement of revenues, expenses, and changes in fund net position. The net position balance at the beginning of the period was $62,144.
Journal Entry for Drive-In Theatre Fund’s operating activities for the year. | |||||||||||||||||||||||
1 | Cash A/c | Dr. | 90,210.00 | ||||||||||||||||||||
Rent Receivable A/c | Dr. | 94,444.00 | |||||||||||||||||||||
To Rent Income A/c | 1,84,654.00 | ||||||||||||||||||||||
2 | Administrative Services A/c | Dr. | 25,205.00 | ||||||||||||||||||||
Maintenance and Repairs A/c | Dr. | 72,882.00 | |||||||||||||||||||||
Supplies and Materials A/c | Dr. | 7,792.00 | |||||||||||||||||||||
Utilities A/c | Dr. | 30,124.00 | |||||||||||||||||||||
To Cash A/c | 1,36,003.00 | ||||||||||||||||||||||
3 | Drive-In Theatre Fund A/c | Dr. | 60,000.00 | ||||||||||||||||||||
To General Fund A/c | 60,000.00 | ||||||||||||||||||||||
4 | Depreciation A/c | Dr. | 3,519.00 | ||||||||||||||||||||
To Machinery A/c | 3,519.00 | ||||||||||||||||||||||
5 | Bad Debt A/c | Dr. | 667.00 | ||||||||||||||||||||
To Debtors A/c | 667.00 | ||||||||||||||||||||||
|
Statement of Expenses | |
Administrative Services Exp | 25,205.00 |
Maintenance and Repairs Exp | 72,882.00 |
Supplies and Materials Exp | 7,792.00 |
Utilities Exp | 30,124.00 |
Depreciation Exp | 3,519.00 |
Bad Debt Exp | 667.00 |
Total | 1,40,189.00 |
Change in Net Position | |
Opening Balance | 62,144.00 |
Add: Income | 1,84,654.00 |
Less: Total Exp | 1,40,189.00 |
Closing Net position | 1,06,609.00 |