The City of Bernard starts the year of 2020 with the following unrestricted amounts in its general fund: cash of $26,500 and investments of $85,250. In addition, it holds a small building bought on January 1, 2019, for general government purposes for $320,000 and a related long-term debt of $256,000. The building is depreciated on the straight-line method over 10 years. The annual interest rate on the debt is 10 percent. The general fund has four separate functions: general government, public safety, public works, and health and sanitation. Other information includes the following:
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| Receipts: | |
| Property taxes | $652,000 |
| Sales taxes | 100,400 |
| Dividend income | 21,000 |
| Charges for general government services | 17,500 |
| Charges for public safety services | 8,500 |
| Charges for public works | 5,400 |
| Charges for health and sanitation services | 38,200 |
| Charges for landfill | 8,150 |
| Grant to be used for salaries for health workers (no eligibility requirements) | 36,000 |
| Issued long-term note payable | 222,000 |
| Sold investments (mentioned above) | 102,150 |
| Receivables at year-end: | |
| Property taxes ($15,600 is expected to be uncollectible) | 151,500 |
| Payments: | |
| Salary: | |
| General government | 137,500 |
| Public safety | 116,500 |
| Public works | 86,000 |
| Health and sanitation (all from grant) | 31,500 |
| Utilities: | |
| General government | 12,600 |
| Public safety | 16,850 |
| Public works | 13,000 |
| Health and sanitation | 6,300 |
| Insurance: | |
| General government | 31,900 |
| Public safety | 18,800 |
| Public works (all prepaid as of the end of the year) | 6,000 |
| Health and sanitation | 6,600 |
| Miscellaneous: | |
| General government | 19,000 |
| Public safety | 10,600 |
| Public works | 10,900 |
| Health and sanitation | 11,350 |
| Interest on previous debt | 25,600 |
| Principal payment on previous debt | 17,500 |
| Interest on new debt | 19,980 |
| Building (public works) | 240,000 |
| Equipment (public safety) | 82,000 |
| Public works supplies (30% still held) | 29,000 |
| Investments | 131,000 |
| Ordered but not received: | |
| Equipment | 45,250 |
| Supplies | 9,400 |
| Due at end of year: | |
| Salaries: | |
| General government | 21,900 |
| Public safety | 18,800 |
| Public works | 6,000 |
| |
On the last day of the year, the city borrows $67,000 from a local bank and uses the money to buy a truck. The first payment on the loan (plus interest) will be made at the end of the next year.
The city opens a landfill this year that it records within its general fund. It is a public works function. Closure costs today is estimated as $296,500 although officials do not expect the landfill to be filled for nine more years. The city has incurred no costs to date. The landfill is now 15 percent filled.
For the equipment and supplies that were ordered but not yet received, the City Council (the highest decision-making body in the government) has voted to honor the commitment when the items arrive.
The new building is depreciated over 20 years using the straight-line method and no residual value. Depreciation of the equipment is similar except that its life is only 10 years. Assume the city records a full years depreciation in the year of acquisition.
The investments have a market value of $138,300 at year-end.
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a-1. Prepare a statement of activities for governmental activities in government-wide financial statements for December 31, 2020, and the year then ended.
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a-2. Prepare a statement of net position for governmental activities in government-wide financial statements for December 31, 2020, and the year then ended.
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b-1. Prepare a statement of revenues, expenditures, and other changes in fund balances for the general fund in fund financial statements as of December 31, 2020, and the year then ended. Assume the purchase method is applied.
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b-2. Prepare a balance sheet for the general fund in fund financial statements as of December 31, 2020, and the year then ended. Assume the purchase method is applied.
CITY OF BERNARD Statement of Activities For Year Ended December 31, 2020 Net (Expense) Revenue and Changes in Net Position Program Revenues Charges Grants and for Contributions Services Functions/Programs Expenses Governmental Activities Total Governmental activities: $ 254,900 $ 189,750 General government Public safety Public Works Health and sanitation 17,500 8,500 5,400 x 38,200 $ 192,675 55,750 OOOO (237,400) $ (237,400) (181,250) (181,250) (187,275) X (187,275) 18,450 18,450 (45,580) (45,580) 36,000 Interest on debt 45,580 0 Total governmental activities $ 738,655 $ 69,600 $ 36,000 $ (633,055) $ (633,055) General revenues: $ Property taxes Sales taxes Dividend income Gain on sale of investments Gain on value of investments 787,900 $ 787,900 100,400 100,400 21,000 21,000 16,900 16,900 7,300 7,300 933,500 X 933,500 X 1,867,000 $ 1,867,000 $ Total general revenues Change in net position: Change during 2020 Net positionbeginning Net positionending $ 1,233,945 $ 1,233,945 $ 1,233,945 $ 1,233,945 CITY OF BERNARD Statement of Net Position December 31, 2020 Governmental Activities Totals Assets: Current assets: Cash and cash equivalents Prepaid insurance 6,000 6,000 138,300 Investments 138,300 Receivables (net) Supplies 135,900 8,700 135,900 8,700 Total current assets $ 288,900 $ 288,900 Capital assets: $ 256,000 $ 256,000 Building-general government Building-public works Equipment Truck 228,000 37,050 67,000 228,000 37,050 67,000 Total assets $ 876,950 $ 876,950 Liabilities: Current liabilities: Salaries payable $ 46,700 $ 46,700 Noncurrent liabilities: Bank loan payable Closure liability landfill Long-term notes payable 67,000 $ 44,475 462,400 X 67,000 44,475 Total liabilities 620,575 $ 158,175 Net position: Invested in capital assets, net of related debt Restricted for salaries (Grant) Unrestricted (deficit) Total net position $ 0 $ 0 CITY OF BERNARD Statement of Revenues, Expenditures, and Other Changes in Fund Balances - Governmental Funds For Year Ended December 31, 2020 General Fund Revenues: Property taxes Sales taxes Dividend income Charges for services Grant Investments (realized gain) Investments (unrealized gain) Total $ 0 Expenditures: Current: General governmental Public safety Public works Health and sanitation Debt service: Principal payment on debt Interest on debt Capital outlay: Building Equipment Truck $ 0 $ 0 Total expenditures Excess (deficiency) of revenues over expenses Other financing sources: Proceeds from long-term note Proceeds from bank loan $ 0 0 Total other financing sources Net changes in fund balance Fund balancebeginning Fund balance-ending $ 0 CITY OF BERNARD Balance Sheet Governmental Funds December 31, 2020 General Fund Assets: Cash and cash equivalents Investments Receivables, net Supplies Prepaid insurance Total assets $ 0 Liabilities and fund balances: Liabilities: Salaries payable Fund balances: Nonspendable Restricted for salaries Committed for equipment and supplies Unassigned $ 0 Total liabilities and fund balance $ 0 CITY OF BERNARD Statement of Activities For Year Ended December 31, 2020 Net (Expense) Revenue and Changes in Net Position Program Revenues Charges Grants and for Contributions Services Functions/Programs Expenses Governmental Activities Total Governmental activities: $ 254,900 $ 189,750 General government Public safety Public Works Health and sanitation 17,500 8,500 5,400 x 38,200 $ 192,675 55,750 OOOO (237,400) $ (237,400) (181,250) (181,250) (187,275) X (187,275) 18,450 18,450 (45,580) (45,580) 36,000 Interest on debt 45,580 0 Total governmental activities $ 738,655 $ 69,600 $ 36,000 $ (633,055) $ (633,055) General revenues: $ Property taxes Sales taxes Dividend income Gain on sale of investments Gain on value of investments 787,900 $ 787,900 100,400 100,400 21,000 21,000 16,900 16,900 7,300 7,300 933,500 X 933,500 X 1,867,000 $ 1,867,000 $ Total general revenues Change in net position: Change during 2020 Net positionbeginning Net positionending $ 1,233,945 $ 1,233,945 $ 1,233,945 $ 1,233,945 CITY OF BERNARD Statement of Net Position December 31, 2020 Governmental Activities Totals Assets: Current assets: Cash and cash equivalents Prepaid insurance 6,000 6,000 138,300 Investments 138,300 Receivables (net) Supplies 135,900 8,700 135,900 8,700 Total current assets $ 288,900 $ 288,900 Capital assets: $ 256,000 $ 256,000 Building-general government Building-public works Equipment Truck 228,000 37,050 67,000 228,000 37,050 67,000 Total assets $ 876,950 $ 876,950 Liabilities: Current liabilities: Salaries payable $ 46,700 $ 46,700 Noncurrent liabilities: Bank loan payable Closure liability landfill Long-term notes payable 67,000 $ 44,475 462,400 X 67,000 44,475 Total liabilities 620,575 $ 158,175 Net position: Invested in capital assets, net of related debt Restricted for salaries (Grant) Unrestricted (deficit) Total net position $ 0 $ 0 CITY OF BERNARD Statement of Revenues, Expenditures, and Other Changes in Fund Balances - Governmental Funds For Year Ended December 31, 2020 General Fund Revenues: Property taxes Sales taxes Dividend income Charges for services Grant Investments (realized gain) Investments (unrealized gain) Total $ 0 Expenditures: Current: General governmental Public safety Public works Health and sanitation Debt service: Principal payment on debt Interest on debt Capital outlay: Building Equipment Truck $ 0 $ 0 Total expenditures Excess (deficiency) of revenues over expenses Other financing sources: Proceeds from long-term note Proceeds from bank loan $ 0 0 Total other financing sources Net changes in fund balance Fund balancebeginning Fund balance-ending $ 0 CITY OF BERNARD Balance Sheet Governmental Funds December 31, 2020 General Fund Assets: Cash and cash equivalents Investments Receivables, net Supplies Prepaid insurance Total assets $ 0 Liabilities and fund balances: Liabilities: Salaries payable Fund balances: Nonspendable Restricted for salaries Committed for equipment and supplies Unassigned $ 0 Total liabilities and fund balance $ 0
