Chapter 4, Problem 8E

(Fund Balance Classification) Your firm is auditing the financial statements of the City of Mensah’s Point for the year ended December 31, 20X4. You have been assigned to review a fund balance schedule to see if you can identify any likely errors in the fund balance section of the governmental funds balance sheet. The fund balance section, as prepared by the finance staff of the city, is presented below.

1. a. Identify any apparent misclassifications of fund balance and explain the basis for your Required opinion that the amounts are misclassified.
2. b. Draft a corrected fund balance schedule. State any assumptions made other than those you explained in a.