Question 3

Reconciliations required to yield government-wide financial statements from fund financial statements and preparation of financial statements The City of Bar Harbor is preparing its government-wide financial statements for the year. Its accountant must prepare a number of journal entries to recognize assets and liabilities previously omitted from the fund financial statements and to recognize revenues and expenses for the year under accrual accounting that were not recognized under the current financial resources measurement focus and the modified accrual basis of accounting used to prepare the Statement of Revenues, Expenditures, and Changes in Fund Balances for its funds.

a. Prepare a list of the required reconciliations to recognize the following in the government-wide financial statements (all amounts in $1,000s):

1. Recognize Capital Assets of $712,000 as of the beginning of the year.

Reconciliation Spreadsheet
Description	Debit	Credit
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBonds payableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

2. Record Depreciation Expense of $35,600 for the year and reverse Expenditures of $42,720 for Capital Outlays during the year.

Depreciation expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

3. Recognize $35,000 of Bonds Payable as of the beginning of the year.

AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

4. Reverse Other Financing Sources of $10,000 and Expenditures - Debt Payments of $3,500 relating to increases and decreases in the bond liability during the year.

AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
Bondspayable	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

5. Reverse Deferred Revenue of $97,500 as of the beginning of the year.

AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

6. Reverse $4,875 of Deferred Revenue recognized during the year.

AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

7. Recognize Compensated Absences of $14,240 as of the beginning of the year and an increase in that liability of $710 during the year.

Net position	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

8. Recognize $100 of Accrued Interest Payable as of the beginning of the year and an increase in that liability of $165 during the year.

Net position	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer

9. Recognize a liability of $19,580 relating to the City's landfill as of the beginning of the year. The estimate for this liability did not change during the year.

AnswerCapital assets, netNet positionAccrued interestBondspayableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer
AnswerCapital assets, netNet positionAccrued interestBonds payableCompensated absencesLandfill closure and postclosure care costsDeferred revenuesRevenuesOther financing sources--proceeds from bondsExpenditures--capital outlayExpenditures--debt principal paymentsDepreciation expenseCompensated absences expenseInterest expense	Answer	Answer