The City of Bernard starts the year of 2013 with the following unrestricted amounts in its General Fund: cash of $20,000 and investments of $70,000. In addition, it holds a building bought on January 1, 2012, for general government purposes for $300,000 and related long- term debt of $240,000. The building is being depreciated on the straight-line method over 10 years. The interest rate is 10 percent. The General Fund has four separate functions: general government, public safety, public works. and health and sanitation. Other information includes the following:
Receipts: |
|
Property taxes | $510,000 |
Sales taxes | 99,000 |
Dividend income | 20,000 |
Charges for general government services | 15,000 |
Charges for public safety services | 8,000 |
Charges for public works | 4,000 |
Charges for health and sanitation service | 31,000 |
Charges for landfill | 8,000 |
Grant to be used for salaries for health workers (no eligibility requirements) | 25,000 |
Issued long-term note payable | 200,000 |
Sold above investments | 84,000 |
Receivables at year-end: |
|
Property taxes ($10,000 is expected to be uncollectible) | 130,000 |
Payments: |
|
Salary: |
|
General government | 90,000 |
Public safety | 94,000 |
Public works | 69,000 |
Health and sanitation (all from grant) | 22,000 |
Utilities: |
|
General government | 9,000 |
Public safety | 16,000 |
Public works | 13,000 |
Health and sanitation | 4,000 |
Insurance: |
|
General government | 25,000 |
Public safety | 12,000 |
Public works(all prepaid as of the end of the year) | 6,000 |
Health and sanitation | 4,000 |
Miscellaneous: |
|
General government | 12,000 |
Public safety | 10,000 |
Public works | 9,000 |
Health and sanitation | 7,000 |
Interest on previous debt | 24,000 |
Principal payment on previous debt | 10,000 |
Interest on new debt | 18,000 |
Building (public works) | 210,000 |
Equipment (public safety) | 90,000 |
Public works supplies(30 percent still held) | 20,000 |
Investments | 111,000 |
Ordered but not received: |
|
Equipment | 24,000 |
Supplies | 7,000 |
Due at end of year: |
|
Salaries: |
|
General government | 14,000 |
Public safety | 17,000 |
Public works | 5,000 |
The city leased a truck on the last day of the year. The first payment will be made at the end of the next year. Total payments will amount to $90,000 but have a present value of $64,000.
The city started a landfill this year that it is recording within its General Fund. It is included as a public works function. Closure costs today would be $260,000 although the landfill is not expected to be filled for nine more years. The city has incurred no costs to date although the landfill is now 15 percent filled.
For the equipment and supplies that have been ordered but not yet received, the City Council (the highest decision-making body in the government) has voted to honor the commitment when the items are received.
The new building is being depreciated over 20 years using the straight-line method and no salvage value, whereas depreciation of the equipment is similar except that its life is only 10 years. Assume the city records a full year’s depreciation in the year of acquisition. The investments are valued at $116,000 at year-end.
a. Prepare a statement of activities and a statement of net assets for governmental activities for December 31, 2013, and the year then ended.
b. Prepare a statement of revenues, expenditures, and changes in fund balances and a balance sheet for the General Fund as of December 31,2013, and the year then ended. Assume that the purchases method is being applied,
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