(Adjustments for fund and government-wide financial statements)

Oliver City had the following transactions and events during calendar-year 2004.

1. The state collects sales taxes on behalf of all cities. During the year 2004, the state collected and remitted $\$ 530,000$ of sales taxes to Oliver. On January 20,2005 , the state sent Oliver the following letter: "We have collected $\$ 30,000$ of sales taxes on your behalf based on December 2004 sales in your city and will send you a check for that amount on or about February $10,2005 . "$

2. During 2004 Oliver hired several inexperienced truck drivers who sideswiped some privately owned vehicles while driving city sanitation trucks. The City settled one of the claims in late December 2004 for $\$ 3,000$, and expected to pay the claim in early January 2005. The other accidents occurred in December 2004. The City corporation counsel thought the City could settle the claims for about $\$ 50,000$, but expected negotiations to drag on until late 2005 or early 2006.

3. Oliver City uses the purchases method to account for materials and supplies. Its inventory at December 31, 2003, was not material. At December 31,2004 , Oliver considered its $\$ 65,000$ inventory to be material and decided to make an appropriate adjustment when preparing its calendaryear 2004 financial statements.

Required: 1. Prepare journal entries to record the year-end adjustments needed for preparing the fund financial statements for the year ended December 31, 2004.

2. Prepare adjusting entries needed for preparing the governmental activities column of the government-wide statements for the year ended December 31, 2004.