C. Required:

1. Start a worksheet for adjustments using the trial balance format illustrated in the text (i.e. list accounts with debit balances first, then accounts with credit balances). Enter the balances from the governmental funds financial statements into the worksheet (This has been started for you, use Ch8_Government_wide_Statements_Student_Template).

• When doing this, follow the following guidelines:

• Net position: Use a single account for net position (which will include the beginning balance of all fund balance accounts). (Done for you)

• Intergovernmental Revenues: When setting up the worksheet, set up separate lines for the intergovernmental revenues (Done for you) as follows:

State Grant for Highway and Street Maintenance	$ 1,065,000
Operational GrantGeneral Government	332,000
Capital GrantPublic Safety	1,340,000
total	$2,737,000

• Capital Assets: It is not necessary to set up separate lines for different classes of capital (fixed) assets or accumulated depreciation (simply use one row for Capital Assets and another for Accumulated Depreciation).

• Confirm that the total debits and credits equal. (Do this)

2. (Now the work begins) Prepare worksheet entries on the tab titled Conversion worksheet and post to the worksheet for the following items. Enter your journal entries in columns B through F and then link the amounts to the adjustments & eliminations Debits or Credits in columns K & L and the Internal Service Funds Debits and Credits columns P & Q. Once you record the journal entry, link the amount to the conversion worksheet, making sure the debits and credits have been entered correctly i.e. debits = credits.

Identify each adjustment by the letter used in the problem:

a. Record the January 1, 2017 balances of general fixed assets and related accumulated depreciation accounts. The City of Monroe had the following balances (excluding Internal Service Funds):

	Cost	Accumulated Depreciation
Totals	$ 64,200,000	28,700,000

b. Eliminate the capital expenditures shown in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

c. Depreciation expense (governmental activities) for the year totaled $ 4,900,000.

d. Eliminate the other financing sources from the sale of bonds by recording a liability for bonds payable and the related premium.

e. As of January 1, 2017, the City of Monroe had $12,000,000 in general obligation bonds outstanding.

f. Eliminate the expenditures for bond principal.

g. Accrue interest in the amount of $328,000. (Two bond issues were outstanding; interest payments for both were last made on July 1, 2017. The computation is as follows: ($11,200,000 .03 6/12) + ($4,000,000 . 08 6/12) = $328,000).

h. Adjust for the interest accrued in the prior year government-wide statements, but recorded as an expenditure in the 2017 fund basis statements, ($12,000,000 .03 6/12) = $180,000.

i. Amortize bond premium in the amount of $ 10,000.

j. Make adjustments for additional revenue accrual. The only adjustment is for property taxes to eliminate the current year deferral of property taxes.

k. Adjust for the $21,000 of property taxes that was deferred in 2016 and recognized as revenue in the 2017 fund-basis statements.

l. Assume the City adopted a policy in 2017 of allowing employees to accumulate compensated absences. Make an adjustment accruing the expense of $ 42,000 Charge compensated absences expense.

m. Bring in the balances of the internal service fund balance sheet accounts. Again, use a single account for all capital assets and a second account for all accumulated depreciation balances (use a separate column of the worksheet to enter Internal Service Fund entries).

n. No revenues from internal service funds were with external parties. Assume $3,200 of the $11,200 Due from Other Funds in the internal service accounts represents a receivable from the General Fund and the remaining $8,000 is due from the enterprise fund. Eliminate the $3,200 interfund receivables.

o. Reduce governmental fund expenses by the net operating profit of internal service funds. As the amount is small, reduce general government expenses for the entire amount.

p. Eliminate transfers that are between departments reported within governmental activities.

3. Prepare, in good form, a Statement of Activities for the City of Monroe for the Year Ended December 31, 2017. For purposes of this statement, assume:

• $ 332,000 in the General Fund is a state grant specifically to support general government programs.
• $ 1,065,000 in the Street and Highway Fund is an operating grant specifically for highway and street maintenance expenses.
• $ 1,340,000 in the City Jail Construction Fund is a capital grant that applies to public safety.

How would you enter A - P ?