Chapter 17, Problem 39P

a.

To determine

Prepare a statement of activity and statement of net position for governmental activities for city B.

Explanation of Solution

Statement of activity in the books of city B:

Statement of activities
Program revenue				Net revenue and change in net assets
Program	Expenses	Charges for services	Grants and contribution	Governmental activities	Total
Primary Government:
Governmental  activities:
General Governmental	$180,000	$15,000		($165,000)	($165,000)
Public Safety	$158,000	$8,000		($150,000)	($150,000)
Public Works	$159,500	$12,000		($147,500)	($147,500)
Health and Sanitation	$37,000	$31,000	$25,000	$19,000	$19,000
Interest on debt	$42,000			($42,000)	($42,000)
Total Governmental
Activities	$576,500	$66,000	$25,000	($485,500)	($485,500)

Table: (1)

Working note:

Computation of closing amount of net assets:

General Revenues:	Amount
Property taxes received	$ 630,000
Sales Taxes	$   99,000
Dividend Income	$   20,000
Gain on Sale of Investments	$   14,000
Gain on Investments	$     5,000
Total general revenues	$ 768,000
	$            -
Change in net assets:	$            -
Net assets – beginning	$ 120,000
Change	$ 282,500
Net assets – ending	$ 402,500

Table: (2)

Statement of net position in the books of city P:

Statement of net assets
Particulars	Governmental activities
Assets
Current Assets:
Cash & Equivalents	$139,000
Prepaid insurance	$6,000
Investments	$116,000
Receivables	$120,000
Inventories	$6,000
Total Current Assets	$387,000
Capital Assets:
Building (Net of depreciation)	$240,000
Building (Net of depreciation)	$199,500
Equipment (Net of depreciation)	$81,000
Truck (Capital Lease)	$64,000
Total Assets	$971,500
Liabilities:
Current Liabilities:
Wages Payable	$36,000
Noncurrent Liabilities:
Lease Obligation
Payable	$64,000
Closure Liability
Landfill	$39,000
Long-term Notes
Payable	$430,000
Total Liabilities	$569,000
Net assets
Invested in capital assets,
net of related debt	$154,500
Unrestricted (deficit)	$248,000
Total Net Assets	$402,500

Table: (2)

b.

To determine

Prepare a statement of revenue, expenditure and change in fund balance and a balance sheet for the city B.

Explanation of Solution

Statement of activity in the books of city B:

Statement of revenue, expenditure and change in fund balance
Revenues:	Amount
Government Funds
Property taxes received	$630,000
Sales taxes	$99,000
Dividend income	$20,000
Charges for Services	$66,000
Grant	$25,000
Investments (Realized Gain)	$14,000
Investments (Unrealized Gain)	$5,000
Total	$859,000
Expenditures:
Current:
General Governmental	$150,000
Public Safety	$149,000
Public Works	$122,000
Health and Sanitation	$37,000
Debt Service:
Principal payment on debt	$10,000
Interest on debt	$42,000
Capital Outlay:
Building	$210,000
Equipment	$90,000
Truck—leased	$64,000
Total expenditures	$874,000
Excess (deficiency) of revenues
over expenses)	($15,000)
Other Financing Sources:
Proceeds from long-term note	$200,000
Capitalized lease—truck	$64,000
Total other financing sources	$264,000
Net Changes in fund balance	$249,000
Fund balance—beginning	$90,000
Less: increase in encumbrances	($31,000)
Fund balance—ending—unrestricted
and unreserved	$308,000

Table: (3)

Balance sheet in the books of city B for the year 2015:

Balance sheet for the year ended 31 December 2015
Particulars	Amount
Assets
Cash and cash equivalents	$139,000
Investments	$116,000
Receivables, net	$120,000
Supplies	$6,000
Prepaid Insurance	$6,000
Total Assets	$387,000
Liabilities and Fund Balances
Liabilities:
Salaries Payable	$36,000
Fund Balances
Reserved fund balances
Encumbrances
Equipment	$24,000
Supplies	$7,000
Supplies	$6,000
Prepaid Insurance	$6,000
Unrestricted, unreserved	$308,000
Total Fund Balance	$351,000
Total Liabilities and Fund Balance	$387,000

Table: (4)