Chapter 8 Government-wide Statements

8C. Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances from Section 5C; (3) the proprietary funds Statement of Net position and Statement of Revenues, Expenses, and Changes in Fund Net position from Section 6C.

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 prepared for Section 5-C. 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).

- Intergovernmental Revenues: When setting up the worksheet, set up separate lines for the intergovernmental revenues as follows:

State Grant for Highway and Street Maintenance $ 1,067,500

Operational GrantGeneral Government 332,000

Capital GrantPublic Safety 1,335,000

total $2,734,500

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.

2. Prepare worksheet entries and post to the worksheet for the following items. Identify each adjustment by the letter used in the problem:

a. Record the January 1, 2020 balances of general fixed asset and related accumulated depreciation accounts. The City of Monroe had the following balances (excluding Internal Service Funds):

Cost Accumulated Depreciation

Totals $ 67,900,000 32,000,000

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 $ 5,130,000.

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, 2020, 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, 2020. 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 2020 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 2019 and recognized as revenue in the 2020 fund-basis statements.

l. Assume the City adopted a policy in 2020 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, 2020. For purposes of this statement, assume:

- $ 332,000 in the General Fund is a state grant specifically to support general government programs.

- $ 1,067,500 in the Street and Highway Fund is an operating grant specifically for highway and street maintenance expenses.

- $ 1,335,000 in the City Jail Construction Fund is a capital grant that applies to public safety.

Use the balances computed from the worksheet completed in part 2 for the governmental activities portion of the statement. Use the solution to P6C (Enterprise fund) to prepare the business activities portion (net any short-term interfund payables/receivables)

4. Prepare, in good form, a Statement of Net position for the City of Monroe as of December 31, 2020. Group all capital assets, net of depreciation. Include a breakdown in the Net position section for (a) capital assets, net of related debt, (b) restricted, and (c) unrestricted. For purposes of classifying net position for the governmental activities,

assume:

-For the governmental activities

net position invested in capital assets, net of related debt , the related debt includes the bonds payable, the premium on

bonds payable, and the advance from the water utility fund.

- The special revenue fund resources are restricted by the granting agency for street and highway maintenance. Assume 204,500 are the only restricted resources in the governmental activities.

5. Prepare the reconciliation necessary to convert from the fund balance reported in the governmental funds Balance Sheet to the net position in the government-wide Statement of Net position.

6. Prepare the reconciliation necessary to convert from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position in the government-wide Statement of Activities.

Dollar amounts appearing in blue are from the financial statements of the Chapter 5 portion of the continuous problem. Enter all amounts as positive numbers. The worksheet is formatted to add debits to assets & expenses and add credits to revenues, liabilities & equity 1 Govtal Fund Balances Govern metal Funds Adjusted Balances for Gov't wide Stumts Refr Account Tules Debits Credits 2 3 4 5 Adjustments & Eliminations Debits Credits Internal Service Funds Debits Credits 541400 541,400 7 DEBIT CAN Cash with scal Asent Investment Tres Recent Interest Receivable, et Inventores Due from State Govt. Due from other funds Capital Assets 541,400 760,000 28:00 457500 16 8.0 263 42 16,50 45700 1685 557500 557,500 557 500 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Eupenditures ose Gument General 1649.000 1649.000 30 2. Highway Streets Santsin Heat 2,481,900 991400 724 100 374 300 917300 1649.000 300.000 2.400 591 400 724 100 374 300 917 300 726.100 2276 8898888888 Culture and Recreation Compensated Absences fue Other Expenditures expenses Dobrvice Principal - Interest (expenditure expense) 300.000 514000 DO 514.000 800.000 514,000 - Capital Oy 5,821,100 5,821100 S 821100 30 31 32 Other Fin. Uses - Transfers Out 1,868.700 ULO 1868 700 E30 21,404950 2012100 263 800 263 800 45200 40.200 33 34 35 38 37 38 39 40 41 42 43 44 45 46 TODO CREDITS: Acces Payable Due to the fun Accrued interest Payable Bonds Payabe Presuma Bones Compensated Absence Payable Advance from Water Uly Fund Deferred inflows Property Taxes Accumulated Depreciation 17500 12,500 17.500 6345.000 SOLO 2330.000 133.000 Revenues Property Sales Tres Interest Licenses & Permits Misces State Grant for HWD Capital Grant Gen Govt Capital Grant Public Safety 800.000 48 49 50 51 52 $0 54 55 56 57 58 6345.000 2088.000 18.000 800.000 350 000 1087.500 332.000 1396000 LOG7500 1 067 332.000 1395000 35,000 4,000,000 Other Financing Sources Proceed 4.000.000 Premium on Bonds Transfers in Not Position at beginning of year three rows 1.328 250 4.000.000 200.000 1888700 1700 32,250 61 62 63 64 65 66 1.328 250 14049 column totals debits - credits ?? D 1 Program Revenues Net (Expense) Revenue and Change in Net Position Operational Capital Grants and Grants and Business- Charges for Contribution Contribution Governmenta Type Services 1 Activities Activities Total Expenses $ $ 3 Functions Programs 4 Governmental Activities: 5 General Government Public Safety 7 Highways and Streets 8 Sanitation 9 Healt 10 Welfare 11 Culture and Recreation 12 Depreciation 13 Interest 14 Compensated Absneces 15 Total Governmental Activities 16 Business Type Activities 17 Water and Sewer 18 Total Government 19 20 21 $ $ - $ $ $ $ 23 24 25 26 27 28 29 30 31 32 General Revenues Taxes: Property Taxes Sales Taxes Interest licenses and Permits Miscellaneous Total General Revesses Change in Net Position Net Position, Beginning Net Position, Ending $ $ $ B D G H Governmental Activities Business Type Activities Total $ Net the amounts due from and (due to) other funds $ $ $ 2 Assets 3 Cash 4 Cash with Fiscal Agents 5 Investments 6 Accounts Receivable (Net) 7 Taxes Receivable (Net) 8 Interest Receivable 9 Internal Balances Current 10 Doe from Other Governments 11 Inventories 12 Internal Balances Long Term 13 Restricted Assets 14 Capital Assets, Net of Accumulated Depreciation 15 Total Assets 16 17 Liabilities 18 Accounts Payable 19 Payroll Taxes Payable 20 Accrued Interest Payable 21 Revenue Bonds Payable 22 General Obligation Bonds Payable 23 Premium on Bonds Sold 24 Compensated Absences Payable 25 Total Liabilities 26 27 Net Position 28 Net Investment in Capital Assets 29 Restricted 30 Unrestricted 31 Total Net Position 32 F 1 2 3 B D E CITY OF MONROE Reconciliation of the Balance sheet of Governmental Funds to the Statement of Net Position As of December 31, 2020 $ 2,274,750 4 5 6 7 8 Fund balances reported in governmental finds Balance Sheet Amounts reported for governmental activities in the Statement of Net Position are different because Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Amount does not include capital assets of internal service funds (reported in following row). The assets and tablities of internal service funds are included in governmental funds in the Statement of Net Position Deferred revenue for property taxes reported in the funds but accrued as reveme in the government-wide statements and added to Net Position Accrued interest payable is reported as a liability in the Statement of Activities, interest is not accrued in the governmental funds Bonds payable, not dae and payable in the current period are not reported in the funds. Compensated absences, not de and payable in the current period are not reported in the funds. Net Position of Governmental Activities 9 10 11 12 13 14 15 $ 2.274,750 CITY OF MONROE Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the year ended December 31, 2020 946,500 Net change in fund balances - Governmental finds Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds report capital outlays as expenditures rather than assets Governmental funds do not report depreciation expense The net revenue of internal service funds is not reported with the governmental funds Property taxes dae more than 60 days after year end is not accrued in the governmental funds. Bond proceeds are reported as other financing sources in the governmental funds but as fiabilities in the government- wide statements Repayment of bonds is reported as an expenditure in the governmental funds Interest is not accrued at year end in the governmental funds. Increases in compensated absences, not due and payable in the current period are not reported in the funds. Change in Net Position of Governmental Activities S 946,500 Dollar amounts appearing in blue are from the financial statements of the Chapter 5 portion of the continuous problem. Enter all amounts as positive numbers. The worksheet is formatted to add debits to assets & expenses and add credits to revenues, liabilities & equity 1 Govtal Fund Balances Govern metal Funds Adjusted Balances for Gov't wide Stumts Refr Account Tules Debits Credits 2 3 4 5 Adjustments & Eliminations Debits Credits Internal Service Funds Debits Credits 541400 541,400 7 DEBIT CAN Cash with scal Asent Investment Tres Recent Interest Receivable, et Inventores Due from State Govt. Due from other funds Capital Assets 541,400 760,000 28:00 457500 16 8.0 263 42 16,50 45700 1685 557500 557,500 557 500 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Eupenditures ose Gument General 1649.000 1649.000 30 2. Highway Streets Santsin Heat 2,481,900 991400 724 100 374 300 917300 1649.000 300.000 2.400 591 400 724 100 374 300 917 300 726.100 2276 8898888888 Culture and Recreation Compensated Absences fue Other Expenditures expenses Dobrvice Principal - Interest (expenditure expense) 300.000 514000 DO 514.000 800.000 514,000 - Capital Oy 5,821,100 5,821100 S 821100 30 31 32 Other Fin. Uses - Transfers Out 1,868.700 ULO 1868 700 E30 21,404950 2012100 263 800 263 800 45200 40.200 33 34 35 38 37 38 39 40 41 42 43 44 45 46 TODO CREDITS: Acces Payable Due to the fun Accrued interest Payable Bonds Payabe Presuma Bones Compensated Absence Payable Advance from Water Uly Fund Deferred inflows Property Taxes Accumulated Depreciation 17500 12,500 17.500 6345.000 SOLO 2330.000 133.000 Revenues Property Sales Tres Interest Licenses & Permits Misces State Grant for HWD Capital Grant Gen Govt Capital Grant Public Safety 800.000 48 49 50 51 52 $0 54 55 56 57 58 6345.000 2088.000 18.000 800.000 350 000 1087.500 332.000 1396000 LOG7500 1 067 332.000 1395000 35,000 4,000,000 Other Financing Sources Proceed 4.000.000 Premium on Bonds Transfers in Not Position at beginning of year three rows 1.328 250 4.000.000 200.000 1888700 1700 32,250 61 62 63 64 65 66 1.328 250 14049 column totals debits - credits ?? D 1 Program Revenues Net (Expense) Revenue and Change in Net Position Operational Capital Grants and Grants and Business- Charges for Contribution Contribution Governmenta Type Services 1 Activities Activities Total Expenses $ $ 3 Functions Programs 4 Governmental Activities: 5 General Government Public Safety 7 Highways and Streets 8 Sanitation 9 Healt 10 Welfare 11 Culture and Recreation 12 Depreciation 13 Interest 14 Compensated Absneces 15 Total Governmental Activities 16 Business Type Activities 17 Water and Sewer 18 Total Government 19 20 21 $ $ - $ $ $ $ 23 24 25 26 27 28 29 30 31 32 General Revenues Taxes: Property Taxes Sales Taxes Interest licenses and Permits Miscellaneous Total General Revesses Change in Net Position Net Position, Beginning Net Position, Ending $ $ $ B D G H Governmental Activities Business Type Activities Total $ Net the amounts due from and (due to) other funds $ $ $ 2 Assets 3 Cash 4 Cash with Fiscal Agents 5 Investments 6 Accounts Receivable (Net) 7 Taxes Receivable (Net) 8 Interest Receivable 9 Internal Balances Current 10 Doe from Other Governments 11 Inventories 12 Internal Balances Long Term 13 Restricted Assets 14 Capital Assets, Net of Accumulated Depreciation 15 Total Assets 16 17 Liabilities 18 Accounts Payable 19 Payroll Taxes Payable 20 Accrued Interest Payable 21 Revenue Bonds Payable 22 General Obligation Bonds Payable 23 Premium on Bonds Sold 24 Compensated Absences Payable 25 Total Liabilities 26 27 Net Position 28 Net Investment in Capital Assets 29 Restricted 30 Unrestricted 31 Total Net Position 32 F 1 2 3 B D E CITY OF MONROE Reconciliation of the Balance sheet of Governmental Funds to the Statement of Net Position As of December 31, 2020 $ 2,274,750 4 5 6 7 8 Fund balances reported in governmental finds Balance Sheet Amounts reported for governmental activities in the Statement of Net Position are different because Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Amount does not include capital assets of internal service funds (reported in following row). The assets and tablities of internal service funds are included in governmental funds in the Statement of Net Position Deferred revenue for property taxes reported in the funds but accrued as reveme in the government-wide statements and added to Net Position Accrued interest payable is reported as a liability in the Statement of Activities, interest is not accrued in the governmental funds Bonds payable, not dae and payable in the current period are not reported in the funds. Compensated absences, not de and payable in the current period are not reported in the funds. Net Position of Governmental Activities 9 10 11 12 13 14 15 $ 2.274,750 CITY OF MONROE Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the year ended December 31, 2020 946,500 Net change in fund balances - Governmental finds Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds report capital outlays as expenditures rather than assets Governmental funds do not report depreciation expense The net revenue of internal service funds is not reported with the governmental funds Property taxes dae more than 60 days after year end is not accrued in the governmental funds. Bond proceeds are reported as other financing sources in the governmental funds but as fiabilities in the government- wide statements Repayment of bonds is reported as an expenditure in the governmental funds Interest is not accrued at year end in the governmental funds. Increases in compensated absences, not due and payable in the current period are not reported in the funds. Change in Net Position of Governmental Activities S 946,500