Conversion to government-wide financial statements

Harlan City, a small city, is planning to issue its first set of GAAP financial statements for the year ended December 31, 2022. To prepare for the transition, the city comptroller wants to have a government wide statement of net position as of January 1, 2022, the beginning of the year. The available information includes extracts from the governmental funds portion of the balance sheet prepared as of December 31, 2021, together with other data necessary to prepare a government-wide statement of net position for governmental activities, using the economic resources measurement focus and accrual basis of accounting. The balance sheet for the combined governmental funds as of December 31, 2021, is as follows:

Harlan City
Balance Sheet
Assets
Cash	$87,500
Property taxes receivable	42,500
Total assets	$130,000
Liabilities
Accounts payable	$21,500
Accrued salaries and other expenses	7,000
Total liabilities	28,500
Deferred Inflows of Resources
Deferred inflows of property taxes	9,000
Fund Balances
Unassigned	92,500
Total liabilities, deferred inflows
of resources, and fund balances	$130,000

The following additional information is available as of December 31, 2021: Capital assets: Harlans capital asset records show that the total acquisition value of the assets in use as of December 31, 2021, is $4,200,000. Estimated accumulated depreciation on the assets is $2,300,000. Bonds payable: Harlan has outstanding bonds payable of $1,300,000 as of December 31, 2021. Of this amount, principal due to be paid during the calendar year 2022 is $75,000. Analysis of the outstanding bonds shows that all of the debt was used to finance the acquisition of capital assets. Interest on long-term debt: In its governmental fund statements, Harlan recognizes interest on bonds payable when it is due and payable. It does not accrue interest for year-end stub periods that will be paid early in the following year. Stub-period interest as of December 31, 2021, was $10,000. Property taxes: Harlan expects that all of its property taxes receivable will be collected in 2022. Property taxes of $9,000 were deferred because Harlan did not expect to collect them during the first 60 days of 2022. Other expenses: Employees may accumulate vacation pay, subject to certain limits, that they may receive in cash on retirement. Governmental fund expenditures of $7,000 include $1,000 that the city will pay early in 2022 to retired employees. Other employees have accumulated vacation pay of $21,000 that Harlan expects to pay when they retire in future years. No accrual has been made for this amount. a. Prepare the journal entries necessary to prepare a government-wide statement of net position as of January 1, 2022. (Hint: Reclassify the fund balance to net position. Because no statement of activities is required, the adjustments to report the additional assets and liabilities will directly affect net position.) Enter accounts in order of magnitude (largest to smallest amounts), debits first. If no entry is necessary, select 'No debit (or credit) entry needed' in the account fields and enter 0 in the amount fields.

b. Complete the worksheet below using the journal entries prepared in (a). c. Prepare a statement of net position as of January 1, 2022, in a classified format. Show the net c. Prepare a statement of net position as of January 1,2022 , in a classified format. Show the net position either as net investment in capital assets or as unrestricted. In each section of the balance sheet, enter accounts in order of magnitude (largest to smallest amounts). Enter contra account amounts as positive numbers. d) Prepare a reconciliation of the governmental funds balance sheet to the government-wide statement of net position. Enter reductions as negative numbers. b. Complete the worksheet below using the journal entries prepared in (a). c. Prepare a statement of net position as of January 1, 2022, in a classified format. Show the net c. Prepare a statement of net position as of January 1,2022 , in a classified format. Show the net position either as net investment in capital assets or as unrestricted. In each section of the balance sheet, enter accounts in order of magnitude (largest to smallest amounts). Enter contra account amounts as positive numbers. d) Prepare a reconciliation of the governmental funds balance sheet to the government-wide statement of net position. Enter reductions as negative numbers