Question

The newly created State Recreation District established the following funds, each of which is a separate fiscal and accounting entity(general fund , debt service fund and capital project fund.A summary of the district’s first‐year transactions follows (all dollar amounts in millions).

1. It levies taxes of $37000, of which it collects $31000. It expects to collect the remaining shortly after year‐end.

2. It incurs $16000 in general operating expenditures, of which it pays 8000.

3. It issues long‐term bonds of $8000. The bonds must be used to finance the acquisition of recreational facilities (equipment).

4. The district acquires $6000 of recreational facilities using the resources available in the capital projects fund. useful life 10 years

5. The district transfers $2400 from the general fund to the fund specially created to account for resources restricted for debt service.

6. The debt service fund paid the first installment on bonds 2200 which includes 200 for interest and 2000 for the principal

7. The repair service (ISF) acquires $4000 of equipment, giving a long‐term note in exchange (useful life of equipment 10 years).

8. The repair service bills the general fund for $3000 and collects 2900, remaining on account. The (ISF) incurs cash operating expenses of $2700 and recognizes depreciation ON equipment.

Required:

1. Prepare a government‐wide statement of activities (statement of revenues and expenses) ?

2. Prepare a government‐wide statement of net position (balance sheet) ?

Answer 1

1)

Statement of Revenue and expenses
Particular	Amount($)	Amount($)
Revenue from operation		37000
Less : Expenses
Operating expenses	16000
Depreciation ( 6000+4000)/10	1000
Operating expenses of ISF	2700	-19700
Operating profit before interest and taxes		17300
Less : Interest expenses		-200
Net Income		17100

2)

Statement of net position (Balance sheet )
Assets	Amount($)	Amount($)
Non current assets
Property and equipment	6000
Accumulated depreciation	-600	5400
Property and equipment (ISF)	4000
Accumulated depreciation	-400	3600
Current assets
Accounts receivables		6000
Cash		15000
Capital project fund (8000 - 6000 )		2000
Debt service fund		200
Repairs service fund		4000
Total assets		36200
Long term liabilities
bonds payable	8000
less : repaid	-2000	6000
Bill of exchange payable		4000
Current laibility
Accounts payable		8000
Payable to ISF Billed		100
Payable to ISF unbilled		1000
Retained earning ( Profit for the year)		17100
Total liabilities		36200

Working:

Cash
Particular	Amount($)
Taxes cash collection	31000
Operating expenses paid	-8000
Bond issued	8000
Operating expenses of ISF	-2700
T/F to capital project fund	-8000
T/F to debt service fund	-2400
T/F to repair service fund	-2900
Total	15000