Chapter 7, Problem 28EP

Appendix—Solid Waste Enterprise Fund. (LO7-6) Brown County operates a solid waste landfill for the citizens of the county. The following events occurred during the county’s fiscal year ended September 30.

1. 1. The county paid interest costs of $6,869,000; of this amount, $214,000 was required to be capitalized to construction work in progress. Amortization of bond premiums was $167,000.
2. 2. The county is self-insured through an internal service fund for workers’ compensation, automotive, and general liability insurance. The Solid Waste Enterprise Fund participates in the county-run program, and the amount paid for the year was $1,069,000.
3. 3. The county’s recorded value of investments as of September 30 was $129,638,000. Fair market value was determined to be $133,590,000.
4. 4. The fund bills franchise haulers, and at September 30, the balance in Accounts Receivable was $4,687,000. The Allowance for Uncollectible Accounts showed a balance of $134,000, but an aging of accounts determined that the balance should be $179,000.
5. 5. The county’s landfill has a total space of 54,000 cubic yards (cy). The county has projected that future closure and postclosure care costs will be $60,600,000. The county’s estimate of cubic yards consumed as of September 30 is 13,500 cy. The balance in the liability account for closure and postclosure costs as of September 30 of the previous year was $13,350,000. (Hint: The current liability account balance should be subtracted from the total proportion of landfill cubic yards used to arrive at the current year’s expense.)

Required

1. a.      Prepare general journal entries to record the Solid Waste Disposal Fund’s activities shown above.
2. b.      Based on the information provided above, does it appear that the fund managers are complying with GASB standards for recognition of closure and postclosure care costs? Explain.
3. c.       The county has set aside funds to meet its financial obligations related to closure and postclosure care costs in the amount of $12,670,000. Where would these funds be reported? Regulations require that solid waste disposal funds have current resources available to satisfy at least 90 percent of the estimated current liability. Does it appear that the Solid Waste Disposal Fund has met this requirement? Why or why not?