The City of Wolfe has issued its financial statements for Year 4(assume that the city uses a calendar year). The cityâs GeneralFund is made up of two functions: (1) education and (2) parks. Thecity also utilizes capital projects funds for ongoing constructionand an enterprise fund to account for an art museum. It also hasone discretely presented component unit.
Thegovernment-wide financial statements indicated the following Year 4totals:
Education had net expenses of$798,000. Parks had net expenses of$182,000. Art museum had net revenues of$60,000. General revenues were$1,080,000; the overall increase in net position was $160,000. Thefund financial statements issued for Year 4 indicated thefollowing: The General Fund had anincrease of $50,750 in its fund balance. The Capital Projects Fund hadan increase of $47,500 in its fund balance. The Enterprise Fund had anincrease of $61,750 in its net position. Officials for Wolfe define âavailableâ as currentfinancial resources to be paid or collected within 60 days.
On the first day of Year 4, the city receives a painting as agift that qualifies as a work of art. It has a 30-year life, isworth $28,500, and is being displayed at one of the local parks.The accountant accidentally capitalized and depreciated it althoughofficials had wanted to use the allowed alternative.
Respond to thefollowing questions:
a. According to the information provided above, the General Fundreported a $50,750 increase in its fund balance. If city officialshad used proper alternatives in this reporting, what would havebeen the correct change in the fund balance for the General Fundfor the year?
The correct increase in Funds balance is
b. According to the information provided above, the parks reportednet expenses of $182,000. If city officials had used properalternatives in this reporting, what was the correct net expensefor parks for the year?
Net expense is
c. Assume the same information except that the art was given to theart museum but not recorded at all. What should have been theoverall change in net position for Year 4 on government-widefinancial statements, assuming that officials still preferred theallowed alternative?
The correct increase in net asset is
The City of Wolfe has issued its financial statements for Year 4(assume that the city uses a calendar year). The cityâs GeneralFund is made up of two functions: (1) education and (2) parks. Thecity also utilizes capital projects funds for ongoing constructionand an enterprise fund to account for an art museum. It also hasone discretely presented component unit. |
| Thegovernment-wide financial statements indicated the following Year 4totals: |
| Education had net expenses of$798,000. |
| Parks had net expenses of$182,000. |
| Art museum had net revenues of$60,000. |
| General revenues were$1,080,000; the overall increase in net position was $160,000. |
| Thefund financial statements issued for Year 4 indicated thefollowing: |
| The General Fund had anincrease of $50,750 in its fund balance. |
| The Capital Projects Fund hadan increase of $47,500 in its fund balance. |
| The Enterprise Fund had anincrease of $61,750 in its net position. |
| Officials for Wolfe define âavailableâ as currentfinancial resources to be paid or collected within 60 days. |
On the first day of Year 4, the city receives a painting as agift that qualifies as a work of art. It has a 30-year life, isworth $28,500, and is being displayed at one of the local parks.The accountant accidentally capitalized and depreciated it althoughofficials had wanted to use the allowed alternative. |
| Respond to thefollowing questions: |
| a. | According to the information provided above, the General Fundreported a $50,750 increase in its fund balance. If city officialshad used proper alternatives in this reporting, what would havebeen the correct change in the fund balance for the General Fundfor the year? The correct increase in Funds balance is |
| b. | According to the information provided above, the parks reportednet expenses of $182,000. If city officials had used properalternatives in this reporting, what was the correct net expensefor parks for the year? Net expense is
|
Related questions
| 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 cityâs fiscal year ends on December 31. |
| a. | 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. |
| b. | Borrows $110,000 cash on a long-term bond for use in creating the new municipal park. |
| c. | 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. |
| d. | 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. |
| e. | 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. |
| f. | 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. |
| g. | 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. |
| h. | 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. |
| i. | 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. |
| j. | Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method. |
| k. | 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. |
| l. | Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution. |
| m. | Orders a school bus for $99,000. |
| n. | 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. |
| o. | 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. |
| p. | 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. |
| q. | 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. |
| r. | Pays $9,000 maintenance charges for the building and sidewalk in (d) and (e). |
| s. | Pays $14,000 on the bond in (b) on the last day of 2015: $5,000 principal and $9,000 interest. |
| t. | Accrues interest of $13,000 on the note in (g) as of the end of 2015, an amount that it will |
| u. | 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 âavailableâ 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 âSpecial Revenue Fundâ and âCapital Projects Fundâ. (Amounts to be deducted should be indicated by a minus sign.) |
