The City of Bernard starts the year of 2017 with the following unrestricted amounts in its general fund: cash of $20,000 and investments of $70,000. In addition, it holds a small building bought on January 1, 2016, 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:On the last day of the year, the city borrowed $64,000 from a local bank and used that money to buy a truck. The first payment on the loan (plus interest) will be made at the end of the next year.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 investments are valued at $116,000 at year-end. Prepare a statement of activities and a statement of net position for governmental activities for December 31, 2017, and the year then ended.Prepare a statement of revenues, expenditures, and other changes in fund balances and a balance sheet for the general fund as of December 31, 2017, and the year then ended. Assume that the purchases method is being applied. Charges for health and sanitation services.31,000Charges for landfill..8,000Grant to be used for salaries for health workers(no eligibility requirements)25,000Issued long-term note payable .200,000Sold above investments...84,000Receivables at year-end:Property taxes ($10,000 is expected to be uncollectible).Payments:Salary:General government..Public safety..Public works...Health and sanitation (all from grant).130,00090,00094,00069,00022,000Utilities:General government..Public safety..Public works...Health and sanitation9,00016,00013,0004,000Insurance:General government..Public safety...Public works (all prepaid as of the end of the year)Health and sanitation.25,00012,0006,0004,000Miscellaneous:General government..Public safety.Public works...12,00010,0009,000Health and sanitation7,000Interest on previous debt.Principal payment on previous debt.Interest on new debt...Building (public works)Equipment (public safety).Public works supplies (30% still held). .24,00010,00018,000210,00090,00020,000Investments.....111,000Ordered but not received:Equipment..Supplies...Due at end of year:24,0007,000Salaries:General government.Public safety.14,00017,000Public works5,000 Receipts:Property taxesSales taxesDividend income.Charges for general government servicesCharges for public safety services.Charges for public works..$510,00020,00015,0008,0004,000

Statement of activity in the books of City B. Working note:

Charges for health and sanitation services. 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). Payments: Salary: General government.. Public safety.. Public works... Health and sanitation (all from grant). 130,000 90,000 94,000 69,000 22,000 Utilities: General government.. Public safety.. Public works... Health and sanitation 9,000 16,000 13,000 4,000 Insurance: General government.. Public safety... Public works (all prepaid as of the end of the year) Health and sanitation. 25,000 12,000 6,000 4,000 Miscellaneous: General government.. Public safety. Public works... 12,000 10,000 9,000 Health and sanitation 7,000 Interest on previous debt. Principal payment on previous debt. Interest on new debt... Building (public works) Equipment (public safety). Public works supplies (30% still held). . 24,000 10,000 18,000 210,000 90,000 20,000 Investments..... 111,000 Ordered but not received: Equipment.. Supplies... Due at end of year: 24,000 7,000 Salaries: General government. Public safety. 14,000 17,000 Public works 5,000 Receipts: Property taxes Sales taxes Dividend income. Charges for general government services Charges for public safety services. Charges for public works.. $510,000 20,000 15,000 8,000 4,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The City of Bernard starts the year of 2017 with the following unrestricted amounts in its general fund: cash of $20,000 and investments of $70,000. In addition, it holds a small building bought on January 1, 2016, 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:

On the last day of the year, the city borrowed $64,000 from a local bank and used that money to buy a truck. The first payment on the loan (plus interest) will be made at the end of the next year.

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 investments are valued at $116,000 at year-end.

Prepare a statement of activities and a statement of net position for governmental activities for December 31, 2017, and the year then ended.
Prepare a statement of revenues, expenditures, and other changes in fund balances and a balance sheet for the general fund as of December 31, 2017, and the year then ended. Assume that the purchases method is being applied.

Charges for health and sanitation services.
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).
Payments:
Salary:
General government..
Public safety..
Public works...
Health and sanitation (all from grant).
130,000
90,000
94,000
69,000
22,000
Utilities:
General government..
Public safety..
Public works...
Health and sanitation
9,000
16,000
13,000
4,000
Insurance:
General government..
Public safety...
Public works (all prepaid as of the end of the year)
Health and sanitation.
25,000
12,000
6,000
4,000
Miscellaneous:
General government..
Public safety.
Public works...
12,000
10,000
9,000
Health and sanitation
7,000
Interest on previous debt.
Principal payment on previous debt.
Interest on new debt...
Building (public works)
Equipment (public safety).
Public works supplies (30% still held). .
24,000
10,000
18,000
210,000
90,000
20,000
Investments.....
111,000
Ordered but not received:
Equipment..
Supplies...
Due at end of year:
24,000
7,000
Salaries:
General government.
Public safety.
14,000
17,000
Public works
5,000

Receipts:
Property taxes
Sales taxes
Dividend income.
Charges for general government services
Charges for public safety services.
Charges for public works..
$510,000
20,000
15,000
8,000
4,000

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