Question

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 depreciated over 10 years using the straight-line method with no salvage value. The city uses the equipment for health and sanitation and depreciates it using the straight-line method over five years with no salvage value.

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-1. Prepare a statement of activities for governmental activities for December 31, 2017.

a-2. Prepare a statement of net position for governmental activities for December 31, 2017.

b-1. Prepare a statement of revenues, expenditures, and other changes in fund balances for the general fund as of December 31, 2017. Assume that the city applies the consumption method.

b-2. Prepare a balance sheet for the general fund as of December 31, 2017. Assume that the city applies the consumption method.

Answer 1

For the City of Williamson in 2017, the statement of activities for governmental activities shows total revenues of $412,000 and total expenditures of $487,000, resulting in a net decrease in fund balances of $75,000.

The statement of net position for governmental activities shows total assets of $817,000 and total liabilities of $322,000, resulting in a total net position of $495,000.

The statement of revenues, expenditures, and other changes in fund balances for the general fund shows total revenues of $412,000 and total expenditures of $487,000, resulting in a net decrease in fund balances of $75,000.

The balance sheet for the general fund shows total assets of $514,000 and total liabilities of $109,000, resulting in a fund balance of $405,000.

a-1. Statement of Activities for Governmental Activities

Revenues:

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

Expenditures:

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: $11,000
Health and sanitation: $12,000
Interest on debt: $16,000
Principal payment on debt: $4,000

Net Increase/(Decrease) in Fund Balances: ($75,000)

Total Revenues & Other Financing Sources: $412,000
Total Expenditures & Other Financing Uses: $487,000

Net Increase/(Decrease) in Net Position: ($75,000)

a-2. Statement of Net Position for Governmental Activities

Assets:

Cash & Cash Equivalents: $412,000
Receivables: $90,000
Storage Shed: $120,000
Equipment: $80,000
Supplies: $12,000
Investments: $103,000

Total Assets: $817,000

Liabilities:

Long-Term Note Payable: $200,000
Property Taxes Payable: $90,000
Salaries Payable: $19,000
Compensated Absences Payable: $13,000

Total Liabilities: $322,000

Net Position:

Net Investment in Capital Assets: $200,000
Restricted Net Position: $0
Unrestricted Net Position: $295,000

Total Net Position: $495,000

b-1. Statement of Revenues, Expenditures, and Other Changes in Fund Balances for the General Fund

Revenues:
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

Expenditures:
Salary—General Government: $66,000
Salary—Public Safety: $39,000
Salary—Health and Sanitation: $22,000
Rent—General Government: $11,000
Rent—Public Safety: $18,000
Rent—Health and Sanitation: $3,000
Maintenance—General Government: $21,000
Maintenance—Public Safety: $5,000
Maintenance—Health and Sanitation: $9,000
Insurance—General Government: $8,000
Insurance—Public Safety: $11,000
Insurance—Health and Sanitation: $12,000
Interest on Debt: $16,000
Principal Payment on Debt: $4,000

Net Increase/(Decrease) in Fund Balances: ($75,000)

Fund Balance—Beginning of Year: $0

Fund Balance—End of Year: ($75,000)

b-2. Balance Sheet for the General Fund

Assets:
Cash & Cash Equivalents: $412,000
Receivables: $90,000
Supplies: $12,000

Total Assets: $514,000

Liabilities:

Property Taxes Payable: $90,000
Salaries Payable: $19,000

Total Liabilities: $109,000

Fund Balance: $405,000