39. The City of Bernard starts the year of 2008 with the following unrestricted amounts in its...
Question:
39. The City of Bernard starts the year of 2008 with the following unrestricted amounts in its Gen¬ eral Fund: cash of $20,000 and investments of $70,000. In addition, it holds a building bought on January 1, 2007, for general government purposes for $300,000 and related long-term debt of $240,000. The building is being depreciated on the straight-line method over 10 years. The inter¬ est rate is 10 percent. The General Fund has four separate functions: general government, public safety, public works, and health and sanitation. Other information includes the following:
Receipts:
Propertytaxes. $510,000 Sales taxes.99,000 Dividend income.20,000 Charges for general governmentservices. 15,000 Charges for public safetyservices. 8,000 Charges for public works.4,000 Charges for health and sanitation services.31,000 Charges forlandfill. 8,000 Grant to be used for salaries for health workers (no eligibilityrequirements). 25,000 Issued long-term note payable.200,000 Sold above investments. 84,000 Receivables at year end:
Property taxes ($10,000 is expected to be uncollectible). 130,000 Payments:
Salary:
Generalgovernment. 90,000 Publicsafety. 94,000 Publicworks. 69,000 Health and sanitation (all from grant).22,000 Utilities:
Generalgovernment. 9,000 Publicsafety. 16,000 Publicworks. 13,000 Health and sanitation.4,000 Insurance:
Generalgovernment. 25,000 Publicsafety. 12,000 Public works (all prepaid as of the end of theyear). 6,000 Health and sanitation.4,000 Miscellaneous:
Generalgovernment. 12,000 Public safety.10,000 Publicworks. 9,000 Health and sanitation.7,000 Interest on previous debt. 24,000 Principal payment on previous debt.10,000 Interest on new debt.18,000 Building (publicworks). 210,000 Equipment (publicsafety). 90,000 Public works supplies (30 percent stillheld). 20,000 Investments.111,000 Ordered but not received:
Equipment. 24,000 Supplies. 7,000 Due at end of year:
Salaries:
Generalgovernment. 14,000 Publicsafety. 17,000 Publicworks. 5,000 The city leased a truck on the last day of the year. The first payment will be made at the end of the next year. Total payments will amount to $90,000 but have a present value of $64,000.
The city started a landfill this year that it is recording within its General Fund. It is included as a public works function. Closure costs today would be $260,000 although the landfill is not expected to be filled for nine more years. The city has incurred no costs to date although the land¬ fill is now 15 percent filled.
The new building is being depreciated over 20 years using the straight-line method and no sal¬ vage value, whereas depreciation of the equipment is similar except that its life is only 10 years. Assume the city records a full year’s depreciation in the year of acquisition.
The investments are valued at $116,000 at year-end.
a. Prepare a statement of activities and a statement of net assets for governmental activities for December 31,2008, and the year then ended.
b. Prepare a statement of revenues, expenditures, and changes in fund balances and a balance sheet for the General Fund as of December 31, 2008, and the year then ended. Assume that the pur¬ chases method is being applied.
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle