40. The City of Pfeiffer starts the year of 2008 with the General Fund and an enterprise fund. The General Fund has two activities: education and parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city utilizes straight-line depre¬ ciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new $600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic auditorium for entertainment and other cultural affairs.

The following transactions for the city take place during 2008. Assume that the city’s fiscal year ends on December 31.

a. Decides to build a municipal park and transfers $70,000 into a capital projects fund and imme¬ diately expends $20,000 for a piece of land.

b. Borrows $ 110,000 cash on a long-term bond for use in creating the new municipal park.

c. Assesses property taxes on the first day ofthe year. The assessment, which is immediately enforce¬ able, totals $600,000. Ofthis amount, $510,000 will be collected during 2008 and another $50,000 is expected in the first month of 2009. The remainder is expected about halfway through 2009.

d. Constructs a building in the park in

(b) for $80,000 cash for playing basketball and other sports. It is put into service on July 1 and should last 10 years with no salvage value.

e. Builds a sidewalk around the new park for $10,000 cash and puts it into service on July 1. It should last for 10 years, but the city plans to keep it up to a predetermined quality level so that it will last almost indefinitely.

f Opens the park and charges an entrance fee of only a token amount so that it records the park, therefore, in the General Fund. Collections during this first year total $8,000.

g. Buys a new parking deck for $200,000, paying $20,000 cash and signing a long-term note for the rest. The parking deck, which is to go into operation on July 1, is across the street from the civic auditorium and is considered part ofthat activity. It has a 20-year life and no salvage value.

h. Receives a $ 100,000 cash grant for the city school system that must be spent for school lunches for the poor. Appropriate spending of these funds is viewed as an eligibility requirement of this grant. During the current year, $37,000 of the amount received was properly spent.

i. Charges students in the school system a total fee of $6,000 for books and the like. Of this amount, 90 percent is collected during 2008 with the remainder expected to be collected in the first few weeks of 2009.

j. Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method.

k. Receives a painting by a local artist to be displayed in the local school. It qualifies as a work of art, and officials have chosen not to capitalize it. The painting has a value of $80,000. It is viewed as inexhaustible.

l. Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution.

m. Orders a school bus for $99,000.

n. Receives the school bus and pays an actual cost of $ 102,000. The bus is put into operation on October 1 and should last for five years with no salvage value.

o. Pays salaries of $240,000 to schoolteachers. In addition, owes and will pay $30,000 during the first two weeks of 2009. Vacations worth $23,000 have also been earned but will not be taken until July 2009.

p. Pays salaries of $42,000 to city auditorium workers. In addition, owes and will pay $3,000 in the first two weeks of 2009. Vacations worth $5,000 have also been earned but will not be taken until July 2009.

q. Charges customers $130,000 for the rental of the civic auditorium. Of this balance, collected $110,000 in cash and will collect the remainder in April 2009.

r. Pays $9,000 maintenance charges for the building and sidewalk in

(d) and (e).

s. Pays $ 14,000 on the bond in

(b) on the last day of 2008: $5,000 principal and $9,000 interest.

t. Accrues interest of $13,000 on the note in (g) as of the end of 2008, an amount that it will pay in June 2009.

u. Assumes that a museum that operates within the city is a component unit that will be discretely presented. The museum reports to city officials that it had $42,000 of direct expenses this past year and $50,000 revenues from admission charges. The only assets that it had at year-end were cash of $24,000, building (net of depreciation) of $300,000, and a long-term liability of $210,000.
Prepare the 2008 government-wide financial statements for this city. Assume the use of modified approach.