The City of Pfeiffer starts the year of 2015 with the General Fund and an enterp
ID: 2579420 • Letter: T
Question
The City of Pfeiffer starts the year of 2015 with the General Fund and an enterprise fund. The General Fund has two activities: education and parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new $600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic auditorium for entertainment and other cultural affairs.
The following transactions for the city take place during 2015. Assume that the city’s fiscal year ends on December 31.
Decides to build a municipal park and transfers $70,000 into a capital projects fund and immediately expends $20,000 for a piece of land. The creation of this fund and this transfer were made by the highest level of government authority.
Borrows $110,000 cash on a long-term bond for use in creating the new municipal park.
Assesses property taxes on the first day of the year. The assessment, which is immediately enforceable, totals $600,000. Of this amount, $510,000 will be collected during 2015 and another $50,000 is expected in the first month of 2016. The remainder is expected about halfway through 2016.
Constructs a building in the park in (b) for $80,000 cash so that local citizens can play basketball and other sports. It is put into service on July 1 and should last 10 years with no salvage value.
Builds a sidewalk around the new park for $10,000 cash and puts it into service on July 1. It should last for 10 years, but the city plans to keep it up to a predetermined quality level so that it will last almost indefinitely.
Opens the park and charges an entrance fee of only a token amount so that it records the park, therefore, in the General Fund. Collections during this first year total $8,000.
Buys a new parking deck for $200,000, paying $20,000 cash and signing a long-term note for the rest. The parking deck, which is to go into operation on July 1, is across the street from the civic auditorium and is considered part of that activity. It has a 20-year life and no salvage value.
Receives a $100,000 cash grant for the city school system that must be spent for school lunches for the poor. Appropriate spending of these funds is viewed as an eligibility requirement of this grant. During the current year, $37,000 of the amount received was properly spent.
Charges students in the school system a total fee of $6,000 for books and the like. Of this amount, 90 percent is collected during 2015 with the remainder expected to be collected in the first few weeks of 2016.
Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method.
Receives a painting by a local artist to be displayed in the local school. It qualifies as a work of art, and officials have chosen not to capitalize it. The painting has a value of $80,000. It is viewed as inexhaustible.
Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution.
Receives the school bus and pays an actual cost of $102,000. The bus is put into operation on October 1 and should last for five years with no salvage value.
Pays salaries of $240,000 to school teachers. In addition, owes and will pay $30,000 during the first two weeks of 2016. Vacations worth $23,000 have also been earned but will not be taken until July 2016.
Pays salaries of $42,000 to city auditorium workers. In addition, owes and will pay $3,000 in the first two weeks of 2016. Vacations worth $5,000 have also been earned but will not be taken until July 2016.
Charges customers $130,000 for the rental of the civic auditorium. Of this balance, collected $110,000 in cash and will collect the remainder in April 2016.
Pays $14,000 on the bond in (b) on the last day of 2015: $5,000 principal and $9,000 interest.
Accrues interest of $13,000 on the note in (g) as of the end of 2015, an amount that it will
pay in June 2016.
Assumes that a museum that operates within the city is a component unit that will be discretely presented. The museum reports to city officials that it had $42,000 of direct expenses this past year and $50,000 in revenues from admission charges. The only assets that it had at year-end were cash of $24,000, building (net of depreciation) of $300,000, and a long-term liability of $210,000.
Prepare the 2015 fund financial statements for the governmental funds and the proprietary funds. A statement of cash flows is not required. Assume that “available” is defined as within 60 days and that all funds are major. The General Fund is used for debt repayment. Assume that major funds are labeled as “Special Revenue Fund” and “Capital Projects Fund”. (Amounts to be deducted should be indicated by a minus sign.)
The City of Pfeiffer starts the year of 2015 with the General Fund and an enterprise fund. The General Fund has two activities: education and parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new $600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic auditorium for entertainment and other cultural affairs.
Explanation / Answer
Answer:
City of Pfeiffer
Statement of Activities
Government-Wide Financial Statements
Year ending December 31
Net (Expenses)/Revenues
Program
Grants
Component
Expenses
Revenues
and Gifts
Governmental
Business-
Type
Total
Unit
Governmental Activities
—Education
482100
6000
117000
-359100
-359100
—Parks and Recreation
22000
8000
-14000
-14000
Total for Governmental Activities
504100
14000
117000
-373100
-373100
Business-Type Activities
—Civic Auditorium
88000
130000
42000
42000
Total for Primary
Government
592100
144000
117000
-373100
42000
-331100
Component Unit:
—Museum
42000
50000
$8,000
General Revenues
—Property Taxes
600000
600000
Transfers
-20000
20000
-0-
Total General Revenues and
Transfers
580000
20000
600000
-0-
Change in Net Assets
206900
62000
268900
8000
Net Assets, Beginning of Year
1123000
662000
1785000
106000
Net Assets, End of Year
1329900
724000
2053900
114000
Statement of Net Assets
Government-Wide Financial Statements
Governmental
Business-Type
Component
Activities
Activities
Total
Unit
Assets:
—Cash
302400
130000
432400
24000
—Property Tax Receivables
90000
-0-
90000
-0-
—Receivables-School Fees
600
-0-
600
-0-
—Rent Receivable
-0-
20000
20000
-0-
—Supplies
5000
-0-
5000
-0-
—Land
20000
-0-
20000
-0-
—Sidewalk
10000
-0-
10000
-0-
—School Bus
96900
-0-
96900
-0-
—Parking Deck (net)
-0-
195000
195000
-0-
—Buildings (net)
1026000
580000
1606000
300000
Total Assets
1550900
925000
2475900
324000
Liabilities:
—Salary Payable
30000
3000
33000
-0-
—Vacation Payable
23000
5000
28000
-0-
—Interest Payable
-0-
13000
13000
-0-
—Deferred Revenues
63000
-0-
63000
-0-
—Bonds and Notes Payable
105000
180000
285000
210000
Total Liabilities
221000
201000
422000
210000
Net Assets:
—Capital Assets, less
related debt
1047900
582000
1629900
90000
—Unrestricted
282000
142,000
424000
24000
Total Net Assets
1329900
724000
2053900
114000
City of Pfeiffer
Statement of Activities
Government-Wide Financial Statements
Year ending December 31
Net (Expenses)/Revenues
Program
Grants
Component
Expenses
Revenues
and Gifts
Governmental
Business-
Type
Total
Unit
Governmental Activities
—Education
482100
6000
117000
-359100
-359100
—Parks and Recreation
22000
8000
-14000
-14000
Total for Governmental Activities
504100
14000
117000
-373100
-373100
Business-Type Activities
—Civic Auditorium
88000
130000
42000
42000
Total for Primary
Government
592100
144000
117000
-373100
42000
-331100
Component Unit:
—Museum
42000
50000
$8,000
General Revenues
—Property Taxes
600000
600000
Transfers
-20000
20000
-0-
Total General Revenues and
Transfers
580000
20000
600000
-0-
Change in Net Assets
206900
62000
268900
8000
Net Assets, Beginning of Year
1123000
662000
1785000
106000
Net Assets, End of Year
1329900
724000
2053900
114000