Chapter 9 Adjusting and Closing Entries for Governmental Activities, Government-wide Level; Preparation of Government-wide and Major Fund Financial Statements

Prior to preparing financial statements at the end of FY 2017, it is necessary to record depreciation expense for the year for governmental activities at the government-wide level.

Based on general capital assets assigned to specific functions, depreciation expense related to equipment and infrastructure is allocated to functions as shown below:

Equipment Infrastructure Buildings

General Government $ 54,920 $47,700

Public Safety 187,840 78,150

Public Works 125,596 $ 98,620 50,980

Culture and Recreation 72,244 32,170

Totals $440,600 $ 98,620 $209,000

Required:[Para. 9-a] Record depreciation expense for the year 2017 in the governmental activities general journal at the government-wide level. Verify accuracy of the adjusting entries and post to the general ledger by clicking [Post Entries].

b. Closing Entries. Although closing entries were made in each fund in Chapters 4 through 6 of this cumulative problem, they have not yet been recorded at the government-wide level.

Required: Record the journal entries required on December 31, 2017 to close all temporary accounts for governmental activities at the government-wide level. These entries should also recognize changes in the accounts Net PositionNet Investment in Capital Assets,Net PositionRestricted for Public Safety (see General Fund), and Net PositionRestricted for Capital Projects (see Capital Projects Fund to calculate net position).(Note: Due to the need to deduct accrued interest on long-term debt in calculating the December 31, 2017 balance of Net PositionRestricted for Debt Service you will end up with no restriction on net position for debt service.) For each account to be closed or reclassified, be sure and click on the check mark for [Closing Entry] and that Closing Entries appears in the [Transaction Description]box. Post the closing entries to the general ledger by clicking on [Post Entries].

Before closing the City of Smithville, click on [File], and [Save/Save As] to save your work. If you close the file by clicking on the [X] box you will be asked if you want to save your changes before closing.

c. Use the exportable trial balances used in Chapters 2 through 6 of this problem, and the exportable pre-closing trial balance and post-closing trial balance for governmental activities, to prepare required government-wide and governmental fund financial statements and reconciliations that the City of Smithville must presentfor its basic financial statements to be in conformity with generally accepted accounting principles. (See Illustrations 9-3 through 9-8 of the textbook for examples of these statements.) We recommend that you use Excel to prepare these financial statements; however, your instructor may want you to do these manually. (Note: The City of Smithville is a primary government and has no other organizations for which it is accountable as component units.)