Highbridge County imposes a motor fuel tax to finance road maintenance. It therefore accounts for all road maintenance in a special revenue fund, the entire fund balance of which is legally restricted. The fund's statement of revenues, expenditures, and changes in fund balance and balance sheet are presented as follows.

1. The county prepares its budget for the road maintenance special revenue fund on a strict cash basis- no accruals whatsoever. Based on the information in the financial statements, prepare a schedule in which you account for all inflows and outflows of cash. The county reports inventories on a purchases basis. Be sure that your schedule accounts for the entire $9,000 increase in cash during the year.
2. Are you able to determine from the fund statements presented any of the following?
a. The actual amount of any claims and judgments incurred during the year.
b. The amount of pension benefits earned by employees during the year.
c. The interest cost applicable to the long€term debt issued. If not, would this information be reported elsewhere in the financial statements? Explain.
3. Most governments do not classify their expenditures by object classification as in this example. Instead they report them by function, such as general government, public safety, recreation, and so on. However, they present their assets and liabilities in a fashion similar to that in the example. Is it possible, therefore, to derive information on cash flows from the statement of operations and balance sheets? Explain. Why do you think governments report expenditures by function rather than by object classification?

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Road Maintenance Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance for Year Ending December 31, 2018 (in thousands) $710 Motor fuel tax revenues Expenditures Wage and salaries Contribution to pension fund Supplies Acquisition of equipment Legal settlement Other expenditures $410 35 190 90 70 798 Excess of revenues over expenditures Other financing sources: (88 Proceeds of long-term debt 90 Increase in supplies inventory Total other financing sources Excess of revenue and other financing sources over expenditures Fund balance, beginning of year Fund balance, year-end 98 10 69 $ 79 Balance Sheet as of December 31 (in thousands) 2018 2017 Assets Cash Motor fuel taxes receivable Prepaid expenditures Supplies inventory $26 15 $17 40 $99 32 $82 Total assets Liabilities and fund balances Accounts payable (for supplies) Accrued wages and salaries Claims and judgments payable Current obligation to pension fund Total liabilities Fund balance Total fund balance-restricted Total liabilities and fund balance 0 13 69 20 S99 $82