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resented below are the computed amounts of ratios for the Village of Riverside example appearing in the chapter.   Required: a. Using the financial statements provided in Illustrations 2-5 through 2-11, compute ratios for the City of Salem. Assume the population of Salem is 52,000 and the fair value of property totals $970 million. b. For each ratio, indicate which of the two governments has a stronger financial position. (Round "Debt per Capita" answer to the nearest whole dollar and other answers to 2 decimal places.)

resented below are the computed amounts of ratios for the Village of Riverside example appearing in the chapter.   Required: a. Using the financial statements provided in Illustrations 2-5 through 2-11, compute ratios for the City of Salem. Assume the population of Salem is 52,000 and the fair value of property totals $970 million. b. For each ratio, indicate which of the two governments has a stronger financial position. (Round "Debt per Capita" answer to the nearest whole dollar and other answers to 2 decimal places.)

FINANCIAL ACCOUNTING
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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resented below are the computed amounts of ratios for the Village of Riverside example appearing in the chapter.
 

Required:
a. Using the financial statements provided in Illustrations 2-5 through 2-11, compute ratios for the City of Salem. Assume the population of Salem is 52,000 and the fair value of property totals $970 million.
b. For each ratio, indicate which of the two governments has a stronger financial position.
(Round "Debt per Capita" answer to the nearest whole dollar and other answers to 2 decimal places.)

CITY OF SALEM Statement of Net Position As of December 31, 2017 Primary Government Governmental Business-type Primary Component Units Assets Activities Activities Government Cash and cash equivalents $ 8,242,998 $ 4,814,724 $13,057,722 $ 84,733 Investments 3,312,992 10,350,334 13,663,326 Inventory Receivables (net): 1,072,963 30,779 1,103,742 Taxes receivable 2,872,611 2,872,611 Accounts receivable 722,215 2,657,326 3,379,541 27,085 Due from other governments 1,328,448 1,328,448 Restricted assets 3,933,126 2,295,043 6,228,169 Capital assets (net of accumulated depreciation) 65,690,373 48,894,402 114,584,775 11,170,900 Total assets 87,175,726 69,042,608 156,218,334 11,282,718 Liabilities Accounts payable 2,425,447 493,849 2,919,296 710 Accrued liabilities 4,340,108 473,168 4,813,276 Bonds payable due within one year 2,164,521 1,342,717 3,507,238 Bonds payable due in more than one year 39,834,882 18,858,187 58,693,069 Total liabilities 48,764,958 21,167,921 69,932,879 710 Net position Net investment in capital assets 23,690,970 30,757,135 54,448,105 11,197,985 Restricted 3,933,126 2,295,043 6,228,169 Unrestricted 10,786,672 14,822,509 25,609,181 84,023 Total net position $38,410,768 $47,874,687 $86,285,455 $11,282,008
Transcribed Image Text:CITY OF SALEM Statement of Net Position As of December 31, 2017 Primary Government Governmental Business-type Primary Component Units Assets Activities Activities Government Cash and cash equivalents $ 8,242,998 $ 4,814,724 $13,057,722 $ 84,733 Investments 3,312,992 10,350,334 13,663,326 Inventory Receivables (net): 1,072,963 30,779 1,103,742 Taxes receivable 2,872,611 2,872,611 Accounts receivable 722,215 2,657,326 3,379,541 27,085 Due from other governments 1,328,448 1,328,448 Restricted assets 3,933,126 2,295,043 6,228,169 Capital assets (net of accumulated depreciation) 65,690,373 48,894,402 114,584,775 11,170,900 Total assets 87,175,726 69,042,608 156,218,334 11,282,718 Liabilities Accounts payable 2,425,447 493,849 2,919,296 710 Accrued liabilities 4,340,108 473,168 4,813,276 Bonds payable due within one year 2,164,521 1,342,717 3,507,238 Bonds payable due in more than one year 39,834,882 18,858,187 58,693,069 Total liabilities 48,764,958 21,167,921 69,932,879 710 Net position Net investment in capital assets 23,690,970 30,757,135 54,448,105 11,197,985 Restricted 3,933,126 2,295,043 6,228,169 Unrestricted 10,786,672 14,822,509 25,609,181 84,023 Total net position $38,410,768 $47,874,687 $86,285,455 $11,282,008
Village of Riverside City of Salem Stronger Ratio (1) Financial Position (government-wide, governmental activities) 15 % % (2) Financial Position (General Fund) 11 % % (3) Quick Ratio (government-wide, governmental activities) 2.32 (4) Leverage (government-wide, primary government) 0.11 (5) Debt Service Coverage (enterprise funds) 2.7 times times (6) Debt Service to Total Expenditures (governmental fund-basis) 4 % % (7) Debt per Capita (government-wide, primary government) $ 468 (8) Debt to Assessed Value of Property (government-wide, primary government) 4.68 % %
Transcribed Image Text:Village of Riverside City of Salem Stronger Ratio (1) Financial Position (government-wide, governmental activities) 15 % % (2) Financial Position (General Fund) 11 % % (3) Quick Ratio (government-wide, governmental activities) 2.32 (4) Leverage (government-wide, primary government) 0.11 (5) Debt Service Coverage (enterprise funds) 2.7 times times (6) Debt Service to Total Expenditures (governmental fund-basis) 4 % % (7) Debt per Capita (government-wide, primary government) $ 468 (8) Debt to Assessed Value of Property (government-wide, primary government) 4.68 % %
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