The following information pertains to the City of Williamson for 2017, its first year of legal existence. For convenience, assume that all transactions are for the general fund. which has three separate functions: general government, public safety, and health and sanitation.
Receipts: | |
Property taxes | $320,000 |
Franchise taxes | 42,000 |
Charges for general government services | 5,000 |
Charges for public safety services | 3,000 |
Charges for health and sanitation services | 42,000 |
Issued long-term note payable | 200,000 |
Receivables at end of year: | |
Property taxes (90% estimated to be collectible) | 90,000 |
Payments: | |
Salary: | |
General government | 66,000 |
Public safety | 39,000 |
Health and sanitation | 22,000 |
Rent: | |
General government | 11,000 |
Public safety | 18,000 |
Health and sanitation | 3,000 |
Maintenance: | |
General government | 21,000 |
Public safety | 5,000 |
Health and sanitation | 9,000 |
Insurance: | |
General government | 8,000 |
Public safety ($2,000 still prepaid at end of year) | 11,000 |
Health and sanitation | 12,000 |
Interest on debt | 16,000 |
Principal payment on debt | 4,000 |
Storage shed | 120,000 |
Equipment | 80,000 |
Supplies (20% still held) (public safety) | 15,000 |
Investments | 90,000 |
Ordered but not received: | |
Equipment | 12,000 |
Due in one month at end of year: | |
Salaries: | |
General government | 4,000 |
Public safety | 7,000 |
Health and sanitation | 8,000 |
Compensated absences (such as vacations and sick days) legally owed to general government workers at year-end total $13,000. These amounts will not be taken by the employees until so late in 2018 that the payment is not viewed as requiring 2017 current financial resources.
The city received a piece of art this year as a donation. It is valued at $14,000. It will be used for general government purposes. There are no eligibility requirements. The city chose not to capitalize this property.
The general government uses the storage shed that was acquired this year. It is being
The investments are valued at $103,000 at the end of the year.
For the equipment that has 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 equipment is received.
- a. Prepare a statement of activities and a statement of net position for governmental activities for December 31, 2017, and the year then ended.
- b. Prepare a statement of revenues, expenditures, and other changes in fund balances and a
balance sheet tor the general fund as of December 31, 2017, and the year then ended. Assume that the city applies the consumption method.
a.
Prepare a statement of activities and a statement of net position for the year 2017.
Explanation of Solution
Statement of activity for W:
Statement of activities | |||||||
Program revenue | Net revenue and change in net assets | ||||||
Program | Expenses | Charges for services | Grants and contribution (operating) | Grants and contribution (capital) | Governmental activities | Business activities | Total |
Primary government: | |||||||
Governmental activities | |||||||
General governmental | $149,000 | $5,000 | $14,000 | ($130,000) | ($130,000) | ||
Public safety | $90,000 | $3,000 | ($87,000) | ($87,000) | |||
Health and sanitation | $70,000 | $42,000 | ($28,000) | ($28,000) | |||
Interest on debt | $16,000 | ($16,000) | ($16,000) | ||||
Total governmental activities | $325,000 | $50,000 | $14,000 | ($261,000) | ($261,000) |
Table: (1)
Working note:
Computation of closing amount of net assets:
General revenue: | |
Property taxes | $ 401,000 |
Franchise taxes | $ 42,000 |
Investment | $ 13,000 |
Total | $ 456,000 |
Change in net assets | $ 195,000 |
Net assets – beginning | |
Net assets – closing | $ 195,000 |
Table: (2)
Statement of net assets for W:
Statement of net assets | |||
Particulars | Governmental activities | Business activities | Total |
Assets | |||
Cash & equivalents | $ 62,000 | $ 62,000 | |
Prepaid expenses | $ 2,000 | $ 2,000 | |
Investment | $ 103,000 | $ 103,000 | |
Receivables | $ 81,000 | $ 81,000 | |
Inventories | $ 3,000 | $ 3,000 | |
Capital assets | $ 172,000 | $ 172,000 | |
Total assets | $ 423,000 | $ 423,000 | |
$ - | |||
Liabilities | $ - | ||
Salaries payable | $ 19,000 | $ 19,000 | |
Compensating absence | $ 13,000 | $ 13,000 | |
Noncurrent liabilities | $ 196,000 | $ 196,000 | |
Total liabilities | $ 215,000 | $ 13,000 | $ 228,000 |
$ - | |||
Net assets | $ - | ||
$ - | |||
Invested in net assets | $ (24,000) | $ (24,000) | |
Unrestricted | $ 219,000 | $ 219,000 | |
Total net assets | $ 195,000 | $ 195,000 |
Table: (3)
b.
Prepare a statement of revenues, expenditures and other changes in fund balance and a balance sheet for the year 2017.
Explanation of Solution
Statement of revenues, expenditures and other changes in fund balance for W:
Statement of revenue, expenditure and change in fund balance | ||
Particulars | General funds | Total government funds |
Property taxes | $ 401,000 | $ 401,000 |
Franchise taxes | $ 42,000 | $ 42,000 |
Charges for Services | $ 50,000 | $ 50,000 |
Investments | $ 13,000 | $ 13,000 |
Total | $ 506,000 | $ 506,000 |
Expenditures: | ||
General Governmental | $ 110,000 | $ 110,000 |
Public Safety | $ 90,000 | $ 90,000 |
Health and Sanitation | $ 54,000 | $ 54,000 |
Debt Service: | ||
Principal payment on debt | $ 4,000 | $ 4,000 |
Interest on debt | $ 16,000 | $ 16,000 |
Capital Outlay | $ 200,000 | $ 200,000 |
Total expenditures | $474,000 | $474,000 |
Excess of | ||
revenues over expenses | 32,000 | 32,000 |
Other Financing Sources: | ||
Proceeds from long-term note | 200,000 | 200,000 |
other | ||
uses and sources | 200,000 | 200,000 |
Net Changes in fund balance | ||
Fund Balances (beginning) | - | - |
Fund Balances (ending) | $232,000 | $232,000 |
Table: (4)
Balance sheet for W:
Balance sheet | ||
Particulars | General funds ($) | Total government funds ($) |
Assets: | ||
Cash & equivalents | 62,000 | 62,000 |
Prepaid expense | 2,000 | 2,000 |
Investment | 103,000 | 103,000 |
Receivables | 81,000 | 81,000 |
Inventory | 3,000 | 3,000 |
Total assets | 251,000 | 251,000 |
Liabilities: | ||
Salaries payable | 19,000 | 19,000 |
Fund balance - | ||
For encumbrances | 12,000 | 12,000 |
For inventory | 3,000 | 3,000 |
For prepaid expenses | 2,000 | 2,000 |
For unreserved | 215,000 | 215,000 |
Total fund balance | 232,000 | 232,000 |
Total liabilities | 251,000 | 251,000 |
Table: (5)
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