The fund-basis financial statements of the city of cottonwood have been completed for the year 2015 and appears in the first tab of the excel spread sheet provided with this exercise. In addition, the statement of net position from the previous fiscal year is provided and should be used to determine beginning balances for accounts not appearing in the fund- basis statements. The following information is also available:

a. Capital assets:

Capital assets purchased by governmental funds are charged to capital expenditure and do not appear as assets in the fund basis balance sheet. However, the balance is reflected in the statement of net position in the government wide financial statements.

Depreciation on capital assets used in governmental type activities amounted to $3,100,000 for the year.

No capital assets were sold or disposed of and all purchases are properly reflected in the fund basis statements as capital expenditures.

b. Long term debt

Proceeds from bonds issued by governmental funds are reflected in other financing sources and do not appear as liabilities in the fund- basis balance sheet. Payments of principal are recognized as expenditures when due. The balance of outstanding bonds balance is reflected in the statement of net position in the government-wide financial statements.

Interest is recognized in the fund basis statements only when payment is due. Interest is accrued but not yet payable amounted to $167,000 at December 31,2015. Interest accrued for purposes of the government-wide statements in 2014 has been paid and is reflected in interest expenditure in 2015.

There is no bond discounts or premiums.

C. Deferred inflows of resources

Deferred inflows are comprised solely of property taxes expected to be collected more than 60 days after year-end. The balance of deferred taxes at the end of 2014 was $188,400 and was recognized as revenue in the fund-basis statements in 2015.

d. The city accounts for its solid waste landfill in the general fund (public works department). The estimated liability for closure and postclosure care costs as of Dec 31,2015 is $2,600,000 and appears only in the government-wide statements.

e- Transfers

During the year, the general fund transferred cash to the courthouse renovation, debt service, and enterprise funds.

F. The city does not operated any internal service funds

g. When entering amounts in the statement of activities, charges for service revenue in the governmental finds is attributable to the following functions:

General govt $1,156,497

Judicial adminstration $44,018

Public safety $275,492

Parks and recreation $604,359

Community development $51,611

Total $2,131,977

Required :

Use the excel template provided to complete the following requirements; a separate tab is provided in excel for each of these steps.

Prepare the journal entries necessary to convert the governmental fund financial statements to the accrual basis of accounting.

Post the journal entries to the conversion worksheet provided

Prepare a government-wide statement of activities and statement of Net position for the year 2015.

This is an involved problem, requiring many steps. Here are some hints.

Tab 1 is information to be used in the problem. You do not enter anything here.

After you make the journal entries (Tab 2), post these to the worksheet to convert to the accrual basis. This worksheet is set up so that you enter debits as positive numbers and credits as negative. After you post your entries, look at the numbers below the total credit column to see that debits equal credits. If not, you probably entered a credit as a positive number.

Make sure that total debits equal total credits in the last column (balances for government-wide statements)

When calculating restricted Net position, recall that permanent fund principal is added to restricted fund balances.