Question

The Eaton School District engaged in the following transactions during its fiscal year ending August 31, 2018.

• It established a purchasing department, which would be accounted for in a new internal service fund, to purchase supplies and distribute them to operating units. To provide working capital for the new department it transferred $1.7 million from its general fund to the internal service fund.

• During the year, operating departments that are accounted for in the general fund acquired supplies from the internal service fund for which they were billed $300,000. Of this amount the government transferred $200,000 from the general fund to the internal service fund, expecting to transfer the balance in the following fiscal year. The supplies had cost the purchasing department $190,000. During 2018, the operating departments used only $220,000 of the supplies for which they were billed. They had no supplies on hand at the start of the year.

• The school district transferred $150,000 from its general fund to its debt service fund to make its required March 31, 2018 interest payment. This amount was paid from the debt service fund when due. It represented interest on $8 million of bonds that were issued, at par, on September 30, 2017. The next interest payment of $150,000 is due on September 30, 2018. The district also transferred $75,000 from the general fund to the debt service fund to provide for the eventual repayment of principal.

• The district transferred $4.5 million from the general fund to its pension fund (a fiduciary fund) in partial payment of its actuarially determined contribution of $5.0 million for the year.

• On August 31, the district acquired school buses at a cost of $900,000. The district gave the sup- plier installment notes that required the district to make three annual payments of $361,903. The first payment is due in August 2019. The buses have a useful life of 10 years, with no salvage value.

• On March 1, the district purchased and paid $150,000 for a one‐year insurance policy.

Refer to the two lists below. Select the appropriate amounts from the lettered list for each item in the num- bered list. An amount may be selected once, more than once, or not at all.

1. Amount that the general fund should recognize as supplies expenditure, assuming that inventory is accounted for on a purchases basis

2. Amount that the district should recognize as a pension expenditure in its general fund

3. Amount that the district should recognize as a pension expense in its government‐wide statements

4. Amount that the general fund should recognize as nonreciprocal transfers‐out

5. Amount that the district should recognize as total debt service expenditures in its governmental funds

6. Amount that the government should recognize as total debt service expense in its government‐wide statements

7. Amount that the district should recognize as other financing sources in its general fund financial statements

8. Amount that the district should recognize as capital‐related expenditures, including depreciation, per- taining to its buses in its governmental fund financial statements (the district recognizes a full year’s depreciation on all capital assets in the year of acquisition)

9. Amount that the district should recognize as capital‐related expenses, including depreciation, pertain- ing to its buses in its government‐wide financial statements (the district recognizes a full year’s depre- ciation on all capital assets in the year of acquisition)

10. Amount that the district should recognize as nonspendable fund‐balance in its governmental fund statements

11. Amount that the district should recognize as a deferred outflow of resources relating to its insurance policy.

a. $0 b. $75,000 c. $80,000 d. $90,000 e. $137,500 f. $150,000 g. $220,000 h. $275,000

i. $300,000 j. $900,000 k. $1,925,000 l. $4,500,000 m. $5,000,000 n. $8,000,000 o.

Answer 1