For the past two editions of the textbook, this case has followed the financial condition of Detroit, Michigan. As this text goes to print, Detroit has emerged from bankruptcy and in accordance with Michigan Public Act 181 of 2014, it is currently monitored by the Detroit Financial Review Commission for compliance with the Plan of Adjustment. In the 2016 CAFR, Detroit indicates that its debt rating has actually been upgraded from the time the last edition of the textbook was published, when its debt had received a junk bond rating of Caa2 from Moody’s. Currently the debt is rated as B2, which puts the uninsured debt in the below investment grade category. The audit of the 2015–2016 financial reports, conducted by Plante and Moran, provided Detroit with an unmodified opinion. As discussed in the MD&A, Detroit is making progress toward a sounder financial footing. Bonded debt decreased by $5.8 billion in the fiscal year as a result of eliminated, restructured, and new debt associated with the bankruptcy restructuring. Use the information from the table of selected 10-year trend data and the Detroit CAFR report for the year ended June 30, 2016 to complete this assignment. .tg {border-collapse:collapse;border-spacing:0;} .tg td{border-color:black;border-style:solid;border-width:1px;font-family:Arial, sans-serif;font-size:14px; overflow:hidden;padding:10px 5px;word-break:normal;} .tg th{border-color:black;border-style:solid;border-width:1px;font-family:Arial, sans-serif;font-size:14px; font-weight:normal;overflow:hidden;padding:10px 5px;word-break:normal;} .tg .tg-9wq8{border-color:inherit;text-align:center;vertical-align:middle} .tg .tg-0pky{border-color:inherit;text-align:left;vertical-align:top} .tg .tg-7btt{border-color:inherit;font-weight:bold;text-align:center;vertical-align:top} Selected 10-Year Trend Data from Detrolt's CAFRs Measure 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Cash and cash equivalents $595 $652 $534 $82 $82 $123 $81 $116 $268 $59 Current liabilities $343 $384 $747 $521 $1,038 $818 $871 $823 $858 $726 General Fund balances $501 $438 $53 ($73) ($269) ($148) ($91) ($267) ($142) ($91) Governmental fund total revenues $1,353 $1,378 $1,422 $1,370 $1,524 $1,712 $1,630 $1,748 $1,773 $1,910 Governmental fund total expenditures $1,146 $1,506 $1,326 $1,311 $1,586 $1,711 $1,665 $1,843 $1,908 $1,870 Debt per capita $2,114 $2,229 $3,041 $3,023 $2,961 $3,089 $2,301 $2,074 $2,195 $2,137 Legal debt limit used 34.49% 56.86% 65.17% 66.69% 92.65% 84.82% 75.46% 59.10% 54.50% 49.67% Debt service/operating expenditures 13.53% 18.30% 19.28% 20.19% 15.10% 13.70% 13.39% 14.41% 13.97% 13.00% Required Based on your analysis, do you agree with the auditor’s unmodified report (i.e., you see nothing that would indicate a going-concern issue)?

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For the past two editions of the textbook, this case has followed the financial condition of Detroit, Michigan. As this text goes to print, Detroit has emerged from bankruptcy and in accordance with Michigan Public Act 181 of 2014, it is currently monitored by the Detroit Financial Review Commission for compliance with the Plan of Adjustment. In the 2016 CAFR, Detroit indicates that its debt rating has actually been upgraded from the time the last edition of the textbook was published, when its debt had received a junk bond rating of Caa2 from Moody’s.

Currently the debt is rated as B2, which puts the uninsured debt in the below investment grade category. The audit of the 2015–2016 financial reports, conducted by Plante and Moran, provided Detroit with an unmodified opinion. As discussed in the MD&A, Detroit is making progress toward a sounder financial footing. Bonded debt decreased by $5.8 billion in the fiscal year as a result of eliminated, restructured, and new debt associated with the bankruptcy restructuring.

Use the information from the table of selected 10-year trend data and the Detroit CAFR report for the year ended June 30, 2016 to complete this assignment.

	Selected 10-Year Trend Data from Detrolt's CAFRs
Measure	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Cash and cash equivalents	$595	$652	$534	$82	$82	$123	$81	$116	$268	$59
Current liabilities	$343	$384	$747	$521	$1,038	$818	$871	$823	$858	$726
General Fund balances	$501	$438	$53	($73)	($269)	($148)	($91)	($267)	($142)	($91)
Governmental fund total revenues	$1,353	$1,378	$1,422	$1,370	$1,524	$1,712	$1,630	$1,748	$1,773	$1,910
Governmental fund total expenditures	$1,146	$1,506	$1,326	$1,311	$1,586	$1,711	$1,665	$1,843	$1,908	$1,870
Debt per capita	$2,114	$2,229	$3,041	$3,023	$2,961	$3,089	$2,301	$2,074	$2,195	$2,137
Legal debt limit used	34.49%	56.86%	65.17%	66.69%	92.65%	84.82%	75.46%	59.10%	54.50%	49.67%
Debt service/operating expenditures	13.53%	18.30%	19.28%	20.19%	15.10%	13.70%	13.39%	14.41%	13.97%	13.00%

Required

Use the previous Illustrations from this book to determine relevant ratios to construct from the above trend data. From the ratios you construct and the other trend data in the statistical section of the CAFR, evaluate the financial condition of Detroit as of June 30, 2016. Provide a brief write-up of your analysis.

Electronic Municipal Market Access (EMMA) provides investors and others interested in state and local government debt and financial information an excellent resource. By accessing EMMA, an individual is able to learn about what type of debt is outstanding for a government of interest, and he/she also is able to learn about the debt’s characteristics along with the financial performance of the entity. Access EMMA and use the Education and Browse Issuers sections to complete this case.

Required

To answer the following questions, use the Browse Issuers section, click on a state (your home state might be of interest to you), and then click on a city of interest. Finally, look for a debt issuance. Although a general obligation issuance is preferred, any long-term debt issue should provide the information needed to answer the following questions. Be aware that not all governments will have outstanding debt issuances.

Is a credit rating provided for the debt issue you selected? If so, who issued the rating and what is the rating?
Is the interest on the debt taxable?
Did the issue sell at a discount or premium?
Click on a CUSIP for your debt issue and indicate what financial information was included with the official statement. Check for continuing disclosures (there is a continuing disclosures button)—are CAFRs provided under continuing disclosures?

Required

Access the MSRB Education Center and go to the For Investors section to help answer the following questions:

What is an official statement, and what financial information is required in the official statement?
What are three factors to consider in assessing a bond’s default risk?

Question

For the past two editions of the textbook, this case has followed the financial condition of Detroit, Michigan. As this text goes to print, Detroit has emerged from bankruptcy and in accordance with Michigan Public Act 181 of 2014, it is currently monitored by the Detroit Financial Review Commission for compliance with the Plan of Adjustment. In the 2016 CAFR, Detroit indicates that its debt rating has actually been upgraded from the time the last edition of the textbook was published, when its debt had received a junk bond rating of Caa2 from Moody’s.

Currently the debt is rated as B2, which puts the uninsured debt in the below investment grade category. The audit of the 2015–2016 financial reports, conducted by Plante and Moran, provided Detroit with an unmodified opinion. As discussed in the MD&A, Detroit is making progress toward a sounder financial footing. Bonded debt decreased by $5.8 billion in the fiscal year as a result of eliminated, restructured, and new debt associated with the bankruptcy restructuring.

Use the information from the table of selected 10-year trend data and the Detroit CAFR report for the year ended June 30, 2016 to complete this assignment.

Selected 10-Year Trend Data from Detrolt's CAFRs

Measure 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Cash and cash equivalents $595 $652 $534 $82 $82 $123 $81 $116 $268 $59

Current liabilities $343 $384 $747 $521 $1,038 $818 $871 $823 $858 $726

General Fund balances $501 $438 $53 ($73) ($269) ($148) ($91) ($267) ($142) ($91)

Governmental fund total revenues $1,353 $1,378 $1,422 $1,370 $1,524 $1,712 $1,630 $1,748 $1,773 $1,910

Governmental fund total expenditures $1,146 $1,506 $1,326 $1,311 $1,586 $1,711 $1,665 $1,843 $1,908 $1,870

Debt per capita $2,114 $2,229 $3,041 $3,023 $2,961 $3,089 $2,301 $2,074 $2,195 $2,137

Legal debt limit used 34.49% 56.86% 65.17% 66.69% 92.65% 84.82% 75.46% 59.10% 54.50% 49.67%

Debt service/operating expenditures 13.53% 18.30% 19.28% 20.19% 15.10% 13.70% 13.39% 14.41% 13.97% 13.00%

Required

Based on your analysis, do you agree with the auditor’s unmodified report (i.e., you see nothing that would indicate a going-concern issue)?

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accounting

Use the information from the table of selected 10-year trend data and the Detroit CAFR report for the year ended June 30, 2016 to complete this assignment.

	Selected 10-Year Trend Data from Detrolt's CAFRs
Measure	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Cash and cash equivalents	$595	$652	$534	$82	$82	$123	$81	$116	$268	$59
Current liabilities	$343	$384	$747	$521	$1,038	$818	$871	$823	$858	$726
General Fund balances	$501	$438	$53	($73)	($269)	($148)	($91)	($267)	($142)	($91)
Governmental fund total revenues	$1,353	$1,378	$1,422	$1,370	$1,524	$1,712	$1,630	$1,748	$1,773	$1,910
Governmental fund total expenditures	$1,146	$1,506	$1,326	$1,311	$1,586	$1,711	$1,665	$1,843	$1,908	$1,870
Debt per capita	$2,114	$2,229	$3,041	$3,023	$2,961	$3,089	$2,301	$2,074	$2,195	$2,137
Legal debt limit used	34.49%	56.86%	65.17%	66.69%	92.65%	84.82%	75.46%	59.10%	54.50%	49.67%
Debt service/operating expenditures	13.53%	18.30%	19.28%	20.19%	15.10%	13.70%	13.39%	14.41%	13.97%	13.00%

Required

accounting

Presented below are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2020.

Alvarez Co.
Worksheet
For the Month Ended May 31, 2020
	Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	9,000
Inventory	80,000
Sales Revenue		450,000
Sales Returns and Allowances	10,000
Sales Discounts	5,000
Cost of Goods Sold	250,000

Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns.

1/4

accounting

Use the information from the table of selected 10-year trend data and the Detroit CAFR report for the year ended June 30, 2016 to complete this assignment.

	Selected 10-Year Trend Data from Detrolt's CAFRs
Measure	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Cash and cash equivalents	$595	$652	$534	$82	$82	$123	$81	$116	$268	$59
Current liabilities	$343	$384	$747	$521	$1,038	$818	$871	$823	$858	$726
General Fund balances	$501	$438	$53	($73)	($269)	($148)	($91)	($267)	($142)	($91)
Governmental fund total revenues	$1,353	$1,378	$1,422	$1,370	$1,524	$1,712	$1,630	$1,748	$1,773	$1,910
Governmental fund total expenditures	$1,146	$1,506	$1,326	$1,311	$1,586	$1,711	$1,665	$1,843	$1,908	$1,870
Debt per capita	$2,114	$2,229	$3,041	$3,023	$2,961	$3,089	$2,301	$2,074	$2,195	$2,137
Legal debt limit used	34.49%	56.86%	65.17%	66.69%	92.65%	84.82%	75.46%	59.10%	54.50%	49.67%
Debt service/operating expenditures	13.53%	18.30%	19.28%	20.19%	15.10%	13.70%	13.39%	14.41%	13.97%	13.00%

Required

accounting

Presented below are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2020.

Alvarez Co.
Worksheet
For the Month Ended May 31, 2020
	Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	9,000
Inventory	80,000
Sales Revenue		450,000
Sales Returns and Allowances	10,000
Sales Discounts	5,000
Cost of Goods Sold	250,000

Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns.

1/7

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