The City of Bernard starts the year of 2015 with the following unrestricted amou
ID: 2594768 • Letter: T
Question
The City of Bernard starts the year of 2015 with the following unrestricted amounts in its General Fund: cash of $27,750 and investments of $83,750. In addition, it holds a small building bought on January 1, 2014, for general government purposes for $304,000 and related long-term debt of $243,200. The building is being depreciated on the straight-line method over 10 years. The interest rate 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:
The city started a landfill this year that it is recording within its General Fund. It is included as a public works function. Closure costs today would be $289,500 although the landfill is not expected to be filled for nine more years. The city has incurred no costs to date although the landfill is now 15 percent filled.
For the equipment and supplies that have been 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 are received.
The new building is being depreciated over 20 years using the straight-line method and no salvage value, whereas depreciation of the equipment is similar except that its life is only 10 years. Assume the city records a full year’s depreciation in the year of acquisition.
The investments are valued at $126,500 at year-end.
a. Prepare a statement of activities and a statement of net position for governmental activities for December 31, 2015, and the year then ended. (Amounts to be deducted should be indicated by a minus sign.)
Prepare a statement of revenues, expenditures, and other changes in fund balances and a balance sheet for the General Fund as of December 31, 2015, and the year then ended. Assume that the purchases method is being applied.
The City of Bernard starts the year of 2015 with the following unrestricted amounts in its General Fund: cash of $27,750 and investments of $83,750. In addition, it holds a small building bought on January 1, 2014, for general government purposes for $304,000 and related long-term debt of $243,200. The building is being depreciated on the straight-line method over 10 years. The interest rate 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:
Explanation / Answer
City of Bernard Year 2015 General Fund: Cash 27750 Investments -83750 Building at cost 2014 304000 Bought on 01/01/2014 Related Long term debt -243200 Life of building in years 10 Depreciation straight line Interest rate (%) 10 248000 Statement of activities and a statement of net position as at December 31 2015 Activities $ Receipts: Property taxes 552000 Sales taxes 100400 Dividend income 28000 Charges for general govt services 22600 Charges for public safety services 10600 Charges for public works 4500 Charges for health and sanitation services 32700 Charges for landfill 9800 Grant to be used for salaries of public health workers (no eligibility requirements) -27800 Issued long term note payable 215000 Sold above investments 101000 Property (11600 expected uncollectible) 160500 Uncollectible 11600 Total receipts 1209300 Payments: Salary General government 99500 Public safety 98750 Public works 91250 Health and sanitation (all from grant) -23600 Utilities: General government 9200 Public safety 20550 Public works 17850 Health and sanitation 5700 Insurance: General government 28500 Public safety 14400 Public works (all prepaid at end of year) -6900 Prepaid -6900 Health and sanitation 6000 Miscellaneous: General government 20800 Public safety 14700 Public works 9650 Health and sanitation 7800 Interest on previous debt 24320 Principal payment on previous debt 16600 Interest on new debt 19350 Building (public works) 222000 New Equipment (public safety) 93000 New Public works supplies (30% still held) 27300 Closing stock 8190 Investments 118000 New Oedered but not received Equipment -42000 To be paid for when received Supplies -11100 To be paid for when received Due at end of year: Salaries General government -21100 Outstanding Public safety -19550 Outstanding Public works -7500 Outstanding Total payments 833470 Opening cash balance 27750 Total receipts 1209300 less total payments -833470 Closing cash balance 403580 b. Statement of revenues, expenditures and other changes in General Fund balances as of Dec 31, 2015 (assuming purchsases method) Revenues: Property taxes 552000 Sales taxes 100400 Dividend income 28000 Charges for general govt services 22600 Charges for public safety services 10600 Charges for public works 4500 Charges for health and sanitation services 32700 Charges for landfill 9800 Sale of investments 101000 Property (less uncollectible 11600) 148900 Total revenues 1010500 Expenditures: Salary General government 99500 Public safety 98750 Public works 91250 Health and sanitation (all from grant) -23600 Utilities: General government 9200 Public safety 20550 Public works 17850 Health and sanitation 5700 Insurance: General government 28500 Public safety 14400 Public works (all prepaid at end of year) -6900 Health and sanitation 6000 Miscellaneous: General government 20800 Public safety 14700 Public works 9650 Health and sanitation 7800 Interest on previous debt 24320 Principal payment on previous debt 16600 Interest on new debt 19350 Depreciation: New building (20 years str line) 11100 New Equipment (10 years str line) 9300 Total expenditures 474420 Net revenues 536080 Balance Sheet of General Fund as of 31 December, 2015 Assets: Cash 403580 Investments 126500 Building (old) 273600 Building (New) 210900 Equipment (New) 83700 Landfill (15%) 289500 43425 Liabilities: Long term debt (building) 243200 General Fund