12-5. At the start of the year, the government had no long-term assets or liabilities. In fact, all the infrastructure (e.g., roads) in the village are owned by the county or state rather than the town. However, the village government has the primary responsibility for putting out fires in the village. Transactions 6 and 7 for Simonsen Village, described in Problem 12-4, both relate to the towns new fire truck. Exhibit 12-3 presents January 1, 2021, balances for Simonsen Villages accounts. These balances at the start of the year were the same on both the modified accrual and accrual bases. (Hint: That may not be the case at the end of the year.) Show the beginning balances from Exhibit 12-3 and the transactions from Problem 12-4 in a worksheet format similar to Exhibit 12-2. Show ending balances. Make a separate section for each fund.

Exhibit 12-3 January 1, 2021, Balances

	General Fund	Debt Service Fund	Capital Projects Fund
Cash	$300,000	$ 4,000
Real estate taxes receivable	20,000
State grants receivable	10,000
Due from general fund		16,000
Salaries payable	90,000
Due to debt service fund	16,000
Fund balance/unrestricted net assets	224,000	20,000

Transactions from problem 12-4:

1. Simonsen Village has employees who earned $400,000 for the year. At the end of the year, the salaries payable balance was $10,000. Note that $200,000 of wages related to general government, $140,000 was for education, and $60,000 was for the public works, safety, and sanitation department.
2. Inventory was ordered by Simonsen Village. The entire order was received. The bill for the inventory purchase was $10,000. By the end of the fiscal year, it had used $6,000 of the inventory, but no payment had been made. Each of the three departments had used $2,000 of inventory. The remaining inventory was all earmarked for education.
3. Simonsen Villages major source of funds is real estate taxes. Total tax bills issued were for $300,000. Total collections were the $20,000 from the previous years ending balance in taxes receivable and $260,000 of this years taxes. Eighty percent of the outstanding balance at year-end is expected to be collected early in the next fiscal year.
4. Simonsen Village is entitled to receive unrestricted grants from the state. During the year, grants in the amount of $100,000 were made. The total collections on grants were just $20,000. This $20,000 consisted of $10,000 that the state owed for the previous year and $10,000 for the current years grant. The state will be paying the balance owed to Simonsen Village within 30 days after the year ends.
5. During the year, Simonsen Village was legally required to transfer $60,000 to its debt service fund. A total of $70,000 of cash was paid to the debt service fund. In years when the full required transfer is not made, the debt service fund has a receivable (Due from General Fund). If more than the required amount is paid, the debt service funds receivable declines.
6. Simonsen Village acquired a new fire truck early in the year for $200,000. The fire truck is expected to last 10 years and has no salvage value. It was financed by a long-term note for the full amount. Simonsen Village has a capital projects fund.
7. The interest and principal due on Simonsen Villages debt during the year and paid from the debt service fund were $8,000 and $30,000, respectively. The interest covers all long-term borrowing by Simonsen Village. The principal relates to the fire truck purchased during the year.

MUST use these templates to complete:

General Fund - Modified Accrual Transactions Analysis Worksheet

Liabilities and Fund Balance

Assets

=

Liabilities

Fund Balance and Changes in Fund Balance

Real

Due to

Estate

State

Debt

Deferred

Taxes

Grants

Accounts

Service

Tax

Salaries

Fund

Cash

Receivable

Receivable

Payable

Fund

Revenue

Payable

Balance

Beginning Balance

$0

$0

Transaction # 1

General Government Expenditures

Education Expenditures

Public Works, Safety & Sanitation Expenditures

Transaction # 2

General Government Expenditures

Education Expenditures

Public Works, Safety & Sanitation Expenditures

Transaction # 3a

Real Estate Tax Revenues

Transaction # 3b

Transaction # 4a

State Grant Revenues

Transaction # 4b

Transaction # 5

Transfer to Debt Service Fund

Transaction # 6a

Transaction # 6b

Transaction # 7

_______

________

________

_____

_____

_____

______

________

Ending Balance

$0

$0

$0

=

$0

$0

$0

$0

$0

* Due to the implementation of GASB Statement No. 63 in 2012, the modified accrual transactions analysis worksheet should separately report Deferred Tax Revenues under Deferred Inflows of Resources. Because the new accounting equation for governments is not introduced until Chapter 14, however, the solution provided here is acceptable.

Debt Service Fund
								Liabilities and Fund Balance
			Assets		=	Liabilities		Fund Balance and Changes in Fund Balance
				Due from
				General				Fund
			Cash	Fund				Balance
		Beginning Balance				0
		Transaction # 1
		Transaction # 2
		Transaction # 3
		Transaction # 4
		Transaction # 5							Transfer from General fund
		Transaction # 6
		Transaction # 7							Interest Expenditure
			_______	______		______			Debt ServicePrincipal Expenditure
		Ending Balance	$0	$0	=	$0		$0