Agency Fund Example Solution

Fiduciary Funds are established to account for assets received and held by the government unit in the capacity of agent or trustee. The accounting emphasis lies in showing how the government's fiduciary responsibilities have been met. Fiduciary funds include agency and trust (private-purpose, investment and pension) funds. Agency Funds (AF) - are purely custodial in nature and are accounted for using a modified accrual basis. In agency funds, assets equal liabilities; there is no fund balance, revenues, or expenditures.

Assets

=

Liabilities

ILLUSTRATION: ACCOUNTING FOR AN AGENCY FUND E21-6 From Beams, Anthony, Bettinghaus, & Smith. Advanced Accounting, 11th ed. The City of Laramee established a tax agency fund to collect taxes for the City of Laramee, Bloomer County, and Bloomer County School District. Total tax levies of the three governmental units were $200,000 for 2011, of which $60,000 was for the City of Laramee, $40,000 for Bloomer County, and $100,000 for Bloomer County School District. The tax agency fund charges Bloomer County and Bloomer County School District a 2 percent collection fee that it transfers to the general fund for the City of Laramee in order to cover costs incurred for agency fund operations. During 2011 the tax agency fund collected and remitted $150,000 of the 2011 levies to the various governmental units. The collection fees associated with the $150,000 were remitted to Laramee’s general fund before year-end. Required: Prepare the journal entries necessary in the tax agency fund and the general funds of the City of Laramee, Bloomer County, and Bloomer County School District to record the transactions and events for year 2011.

City of Laramee AF

GF

Taxes receivable for Governmental Units Liability to City of Laramee (30%) Liability to Bloomer County (20%) Liability to Bloomer School District (50%) Taxes receivable Revenues

1

200,000 60,000 40,000 100,000 60,000 60,000

Bloomer County GF

Taxes receivable Revenues

40,000 40,000

Bloomer County School District GF

Taxes receivable Revenues

City of Laramee Bloomer County Bloomer School District

100,000 100,000

Remmittence 150,000 X 150,000 X 150,000 X

Percent .30 .20 .50

= = =

Amount 45,000 30,000 75,000 150,000

Fee x x

.02 .02

= =

600 1,500 2,100

City of Laramee AF

Cash

150,000 Taxes Receivable for Governmental Units

AF

AF

GF

Liability to Bloomer County Liability to Bloomer School District Liability to City of Laramee

150,000 600 1,500 2,100

Liability to City of Laramee Liability to Bloomer County Liability to Bloomer School District Cash

47,100 29,400 73,500

Cash

47,100

150,000

Taxes Receivable Revenues

45,000 2,100

Bloomer County GF

Cash Expenditures

29,400 600 Taxes Receivable

30,000

2

Bloomer County School District GF

Cash Expenditures

73,500 1,500 Taxes Receivable

75,000

3