Chapter 6 – Proprietary Funds

I need Part 3

6–C. Part 1. Internal Service Fund Transactions

The Stores and Service Fund of the City of Monroe had the following account balances as of January 1, 2017:

Required:

a. Open a general journal for the City of Monroe Stores and Service Fund and record the following transactions.

(1) A budget was prepared for FY 2017. It was estimated that the price charged other departments for supplies should be 125% of cost to achieve the desired breakeven for the year.

(2) The amount due from other funds as of January 1, 2017, was collected in full.

(3) During the year, supplies were ordered and received in the amount of $307,000. This amount was posted to accounts payable.

(4) $15,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged.

(5) During the year, supplies costing $250,560 were issued to the General Fund, and supplies costing $46,400 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup ($ 313,200 to General Fund and 58,000 to the Water Utility Fund) in transaction #1.

(6) Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $15,000; Warehousing, $16,900; Delivery, $17,500; and Administrative, $9,000.

(7) Cash was received from the General Fund in the amount of $310,000 and from the Water Utility Fund in the amount of $50,000.

(8) Accounts payable were paid in the amount of $365,000.

(9) Depreciation in the amount of $10,000 was recorded for buildings and $4,600 for equipment.

b. Post the entries to the Stores and Service Fund ledger (t-accounts).

c. Prepare and post an entry closing all nominal accounts to Net position. Compute the balance in the net position accounts, assuming there are no Restricted Net position.

6–C. Part 2. Enterprise Fund Transactions

The City of Monroe maintains a Water and Sewer Fund to provide utility services to its citizens. As of January 1, 2017, the City of Monroe Water and Sewer Fund had the following account balances:

Required:

a. Open a general journal for the City of Monroe Water and Sewer Utility Fund and record the following transactions.

(1) During the year, sales of water to non-government customers amounted to $1,018,000 and sales of water to the General Fund amounted to $37,000.

(2) Collections from non-government customers amounted to $976,000.

(3) The Stores and Services Fund repaid $15,000 of the long-term advance to the Water and Sewer Fund.

(4) Materials and supplies in the amount of $261,000 were received. A liability in that amount was recorded.

(5) Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $169,500; selling, $15,000; administration, $18,000; construction work in progress, $50,000.

(6) Payroll costs for the year totaled $416,200 plus $34,200 for the employer’s share of payroll taxes. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $265,800; sales, $43,900; administration, $91,400; construction work in progress, $49,300.

(7) Bond interest (6½%) in the amount of $162,500 was paid.

(8) Interest in the amount of $17,000 (included in 7 above) was reclassified to Construction Work in Progress.

(9) Construction projects at the water treatment plant (reflected in the beginning balance of construction in process) were completed in the amount of $203,000, and the assets were placed in service. Payments for these amounts were made in the previous year (no effect on 2017 Statement of Cash Flows).

(10) Collection efforts were discontinued on bills totaling $2,890. The unpaid receivables were written off.

(11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $5,500.

(12) Payment of accounts payable amounted to $302,000. Payments of payroll taxes totaled $95,200.

(13) Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies.

(14) Depreciation expense for the year was computed to be $282,000.

(15) In accord with the revenue bond indenture, $25,000 cash was transferred from operating cash to restricted assets.

b. Post the entries to the Water and Sewer Fund ledger (t-accounts).

c. Prepare and post an entry closing all nominal accounts to Net position. Compute the balance in the net position accounts, assuming the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets.

6–C. Part 3. Proprietary Fund Financial Statements

Required:

Prepare, in good form, for the proprietary funds accounted for in Parts 1 and 2, the following:

(1) A Statement of Revenues, Expenses, and Changes in Fund Net position for the Year Ended December 31, 2017.

(2) A Statement of Net position, as of December 31, 2017.

(3) Optional - A Statement of Cash Flows for the Year Ended December 31, 2017. Include restricted assets as a part of cash and cash equivalents for this statement. (Assume any materials and labor attributable to construction in process were paid by year end). This is worth 5 extra credit points!

Consider the following independent situations, all of which apply to audits of entities for the year ending 31 December 20X7:

(i) Slipway Limited, a listed company, has been experiencing declining sales over the last 2 years. Cost cutting has proved difficult due to the high level of imported machinery used in Slipway’s operations and consequently margins have been falling. While the bankers are presently happy to continue providing Slipway with loan facilities, they do expect to see improved results in the next financial report. Articles about Slipway’s expected financial results appearing in recent press reports all had quite a pessimistic tone.

(ii) Discount Foods Limited is a large supermarket chain with offices in all capital cities around Australia. Until 30 June 20X7 data processing relating to payroll transactions will be carried out in each capital city by an independent computer service bureau. \

(iii) Getaway Pty. Limited is a long established firm which has been operating a boutique hotel in the Blue Mountains for over 20 years. During this time, it has adopted a conservative business strategy that has seen it produce adequate, though slightly unimpressive, results. A new CEO has been appointed to run the firm from 1 September 20X7. He has already released his plans for renovating the hotel, despite not officially serving as CEO yet. You have also heard him discuss the implementation of a new marketing strategy to boost occupancy rates.

(iv) Angora Pty. Limited is a small primary producer specializing in the production of angora wool. Angora’s recent display at a trade show has seen orders flood in from overseas buyers. The accountant, Michael, has done his best to satisfy the orders as quickly as possible while maintaining the appropriate (foreign currency) accounting records. However, from some of the questions he has been asking you, you suspect he is out of his depth.

(v) Kings Pty. Limited has been manufacturing uniforms for the Australian market for the last 40 years. The government’s recent tariff reduction policy has placed Kings in direct competition with cheaper uniforms manufactured overseas. In a bid to retain market share, Kings has been selling part of its school uniform range at less than cost. However, overall profit figures remain buoyant.

Required: For each of the above independent situations describe the overall impact on audit risk and identify the specific component(s) of audit risk affected.

Do you agree or disagree with the selected aspects for an organization? Explain

An organization must look for opportunities to improve customer loyalty by developing then implementing programs focused on taking advantage of their respective customers to increase revenues. Customers satisfaction is the key for organizations when they are attempting to create loyal customers.

There are several aspects that an organization must consider when creating loyalty programs in order to see a return on their initial investment. One vital aspect of the entire project begins with performing the proper and effective research. Since, there are numerous program models, establishing the correct program for a business will take time. Organizations must avoid creating programs just because they able to do so. Organizations should utilize data from a variety of sources to analyze what consumers value most and would most likely respond to.

Another aspect that organizations must consider keeping customer loyalty programs simple and easy to manage. “Incentives are widely used for wellness”. The more complex the reward program the more difficult it will be for any business to retain customers. Most businesses utilize a point system such as the Hilton Hotel chain that provides incentives for using their services. The more points gathered by the customer the larger the discount for programs such as these rewards consumers at a certain percentage.

One final aspect that should be considered is marketing of the program for if it’s done incorrectly or not at all, then all the work exhausted in it’s creation would be pointless. “Monetary reward has been defined as an incentive that can make a person wealthier and materially successful if s/he meets the criteria for receiving the reward. Proper investment into marketing a provide greater visibility of your reward program to encourage consumers towards their brand.

Factory overhead cost variance report

Instructions

Amount Descriptions

Factory Overhead Cost Variance Report

X

Instructions

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,500 hours.

During May, the department operated at 8,820 standard hours, and the factory overhead costs incurred were indirect factory wages, $31,462; power and light, $24,428; indirect materials, $18,260; supervisory salaries, $20,400; depreciation of plant and equipment, $35,300; and insurance and property taxes, $20,800.

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,820 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts.

Discussion Question - There is an ongoing debate about the roles of quantitative and qualitative inputs in demand estimation and forecasting. Those in the qualitative camp argue that statistical analysis can only go so far. Demand estimates can be further improved by incorporating purely qualitative factors. Quantitative advocates insist that qualitative, intuitive, holistic approaches only serve to introduce errors, biases, and extraneous factors into the estimation task.

Suppose the executive for the theater chain is convinced that any number of bits of qualitative information (the identity of the director, the film’s terrific script and rock-music sound track, the Hollywood “buzz” about the film during production, even the easing of his ulcer) influence the film’s ultimate box-office revenue.

How might one test which approach—purely qualitative or statistical— provides better demand or revenue estimates? Are there ways to combine the two approaches? Provide concrete suggestions.

A person with a cough is a persona non grata on airplanes, elevators, or at the theater. In theaters especially, the irritation level rises with each muffled explosion. According to Dr. Brian Carlin, a Pittsburgh pulmonologist, in any large audience you'll hear about 8 coughs per minute.

(a) Let r = number of coughs in a given time interval. Explain why the Poisson distribution would be a good choice for the probability distribution of r.

Coughs are a common occurrence. It is reasonable to assume the events are dependent.Coughs are a common occurrence. It is reasonable to assume the events are independent.    Coughs are a rare occurrence. It is reasonable to assume the events are dependent.Coughs are a rare occurrence. It is reasonable to assume the events are independent.

(b) Find the probability of six or fewer coughs (in a large auditorium) in a 1-minute period. (Use 4 decimal places.)


(c) Find the probability of at least eight coughs (in a large auditorium) in a 24-second period. (Use 4 decimal places.)

Suppose that the sitting​ back-to-knee length for a group of adults has a normal distribution with a mean of mu equals 22.7 in. and a standard deviation of sigma equals 1.2 in. These data are often used in the design of different​ seats, including aircraft​ seats, train​ seats, theater​ seats, and classroom seats. Instead of using 0.05 for identifying significant​ values, use the criteria that a value x is significantly high if​ P(x or ​greater)less than or equals0.01 and a value is significantly low if​ P(x or ​less)less than or equals0.01. Find the​ back-to-knee lengths separating significant values from those that are not significant. Using these​ criteria, is a​ back-to-knee length of 24.9 in. significantly​ high? Find the​ back-to-knee lengths separating significant values from those that are not significant. ​Back-to-knee lengths greater than nothing in. and less than nothing in. are not​ significant, and values outside that range are considered significant. ​(Round to one decimal place as​ needed.).

6.2.19-E Suppose that the sitting​ back-to-knee length for a group of adults has a normal distribution with a mean of mu equals 24.1 in. and a standard deviation of sigma equals 1.1 in. These data are often used in the design of different​ seats, including aircraft​ seats, train​ seats, theater​ seats, and classroom seats. Instead of using 0.05 for identifying significant​ values, use the criteria that a value x is significantly high if​ P(x or ​greater)less than or equals0.01 and a value is significantly low if​ P(x or ​less)less than or equals0.01. Find the​ back-to-knee lengths separating significant values from those that are not significant. Using these​ criteria, is a​ back-to-knee length of 26.2 in. significantly​ high? Find the​ back-to-knee lengths separating significant values from those that are not significant. ​Back-to-knee lengths greater than nothing in. and less than nothing in. are not​ significant, and values outside that range are considered significant.

A person with a cough is a persona non grata on airplanes, elevators, or at the theater. In theaters especially, the irritation level rises with each muffled explosion. According to Dr. Brian Carlin, a Pittsburgh pulmonologist, in any large audience you'll hear about 18 coughs per minute.

(a) Let r = number of coughs in a given time interval. Explain why the Poisson distribution would be a good choice for the probability distribution of r. Coughs are a common occurrence. It is reasonable to assume the events are independent. Coughs are a common occurrence. It is reasonable to assume the events are dependent. Coughs are a rare occurrence. It is reasonable to assume the events are independent. Coughs are a rare occurrence. It is reasonable to assume the events are dependent.

(b) Find the probability of seven or fewer coughs (in a large auditorium) in a 1-minute period. (Use 4 decimal places.)

(c) Find the probability of at least eight coughs (in a large auditorium) in a 28-second period. (Use 4 decimal places.)

provide and discuss a specific example of socialization from life experience. (For example, you can discuss your involvement in sports, music, theater, or other group activities, your first paid job, moving to a new city, or an important family/cultural event or holiday, like Thanksgiving).

1. First, explain the experience in detail and then talk about what skills, values, or knowledge you developed as a result.
2. Identify the key agents of socialization (such as family, teachers, or coaches) and their various social roles and identities.  What agents were most directly involved in this experience, and why?
3. Reflect on the ways in which this experience is connected to cultural values and norms.  Which cultural values and norms did you learn about through this experience?
4. Discuss how this experience contributed to your perspective and position in society or social group.  What did you learn about yourself? What did you learn about society?