During 2010, the City of Coyote contracted to build a sidewalk costing \($10,000\) as a special assessments project for which it collected \($10,000\) from affected citizens. The government had no obligation in connection with this project. Both a \($10,000\) revenue and a \($10,000\) expenditure were recorded in the Capital Projects Fund. In preparing government-wide financial statements, an asset and a general revenue were recorded for \($10,000\).

a. In the general information, the Capital Projects Fund reported a $ 40,000 increase in its fund balance.

What was the correct overall change in the Capital Projects Fund’s balance during 2010?

b. In the general information, a \($150,000\) overall increase in the city’s net assets was found on the government-wide financial statements. What was the correct overall change in the city’s net assets on the government-wide financial statements?

Assume that the City of Coyote has already produced its financial statements for December 31, 2010, and the year then ended. The city’s General Fund was only for education and parks. Its Capital Projects Funds worked with each of these functions at times. The city also had established an Enterprise Fund to account for its art museum.
The government-wide financial statements indicated the following figures:
• Education reported net expenses of \($600,000\).
• Parks reported net expenses of \($100,000\).
• Art museum reported net revenues of \($50,000\).
• General government revenues for the year were \($800,000\) with an overall increase in the city’s net assets of \($150,000\).
The fund-based financial statements indicated the following for the entire year:
• The General Fund reported a \($30,000\) increase in its fund balance.
• The Capital Projects Fund reported a \($40,000\) increase in its fund balance.
• The Enterprise Fund reported a \($60,000\) increase in its net assets.
The CPA firm of Abernethy and Chapman has been asked to review several transactions that occurred during 2010 and indicate how to correct any erroneous reporting and the impact of each error. View each situation as independent.