Question

Gilbert City had the following transactions involving resource inflows into its general fund for the year ended June 30, 20X8:

1. The general fund levied $2,200,000 of property taxes in July 20X7. The city estimated that 2 percent of the levy would be uncollectible and that $180,000 of the levy would not be collected until after August 31, 20X8.
2. On April 1, 20X8, the general fund received $50,000 repayment of an advance made to the internal service fund. Interest on the advance of $1,500 also was received.
3. During the year ended June 30, 20X8, the general fund received $2,000,000 of the property taxes levied in transaction (1).
4. The general fund received $265,000 in grant monies from the state to be used solely to acquire computer equipment. During March 20X8, the general fund acquired computer equipment using $240,000 of the grant. The city has not yet determined the use of the remainder of the grant.
5. During the year ended June 30, 20X8, the general fund received $135,000 from the state as its portion of the sales tax. At June 30, 20X8, the state owed the general fund an additional $22,000 of sales taxes. The general fund does not expect to have the $22,000 available until early August 20X8.
6. In July 20X7, the general fund borrowed $810,000 from a local bank using the property tax levy as collateral. The loan was repaid in September 20X7 with the proceeds from property tax collections.
7. In February 20X8, a terminated debt service fund transferred $30,000 to the general fund. The $30,000 represented excess resources left in the debt service fund after a general long-term debt obligation had been paid in full.
8. On July 1, 20X7, the general fund estimated that it would receive $78,000 from the sale of liquor licenses during the fiscal year ended June 30, 20X8. For the year ended June 30, 20X8, $66,000 had been received from liquor license sales.
9. The general fund received $19,000 in October 20X7 from one of the city’s special revenue funds. The amount received represented a reimbursement for an expenditure of the special revenue fund that the city’s general fund paid.
10. In July 20X7, the general fund collected $81,000 of delinquent property taxes that had been classified as delinquent on June 30, 20X7. In the entry to record the property tax levy in July 20X6, the general fund estimated that it would collect all property tax revenues by July 31, 20X7.
Required:
Prepare a schedule showing the amount of revenue that should be reported by Gilbert City’s general fund on the statement of revenues, expenditures, and changes in fund balance for the year ended June 30, 20X8.

Answer 1

Gilbert City

A Schedule showing the amount of revenue in the general fund:

1. July 20X7 Property Taxes $2,200,000

2. Apr. 1, 2018 Interest on Advance 1,500

4. 2018 Grant Monies 265,000

5. June 30 Sales Tax 135,000

5. June 30 Additional Sales Taxes 22,000

6. July 20X7 Liquor Licenses 78,000

Total Revenue $2,701,500

Step-by-step explanation:

Gilbert City, like other government bodies, reports its transactions on the accrual basis. For Gilbert City, this implies that the city will report all revenues receivable, whether actually received or not. And the city only reports the revenues that pertain to the current fiscal period in the current period. Gilbert City's revenues attributed to past and future years do not form part of the revenue for the current period. Gilbert City's reporting basis is in line with the accrual concept and the matching principle of Generally Accepted Accounting Principles.