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	$440,000
Franchise taxes	50,100
Charges for general government services	7,300
Charges for public safety services	5,600
Charges for health and sanitation services	45,900
Issued long-term note payable	299,500
Receivables at end of year:
Property taxes (90% estimated to be collectible)	99,800
Payments:
Salary:
General government	66,750
Public safety	44,500
Health and sanitation	29,400
Rent:
General government	12,300
Public safety	21,900
Health and sanitation	4,800
Maintenance:
General government	40,000
Public safety	6,300
Health and sanitation	10,100
Insurance:
General government	8,700
Public safety ($3,400 still prepaid at end of year)	12,700
Health and sanitation	13,500
Interest on debt	23,960
Principal payment on debt	5,990
Storage shed	203,000
Equipment	96,500
Supplies (20% still held) (public safety)	24,100
Investments	110,000
Ordered but not received:
Equipment	16,000
Due in one month at end of year:
Salaries:
General government	4,500
Public safety	9,600
Health and sanitation	9,900

Compensated absences (such as vacations and sick days) are legally owed to general government workers at year-end total $20,300. 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 $14,500. 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 $132,100 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.

1. 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.
2. 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

Part B-1

CITY OF WILLIAMSON

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

Governmental Funds

For Year Ended December 31, 2017

Revenues:	General:	Total government funds
Property taxes	529820	529820
Franchise taxes	50100	50100
Charges for Services	58800	58800
Investments (Gain)	22100	22100
	660820	660820
Expenditures:
Current:
General Governmental	132250	132250
Public Safety	110880	110880
Health and Sanitation	67700	67700
Debt Service:
Principal payment on debt	5,990	5,990
Interest on debt	23960	23960
Capital Outlay	299500	299500
Total expenditures	640280	640280
Excess (Deficiency) of revenues over expenses)	20540	20540
Other Financing Sources:
Proceeds from long-term note	299500	299500
Total other uses and sources
Net Changes in fund balance
Fund Balances (beginning)	0	0
Fund Balances (ending)	320040	320040

General Governmental = 66750+12300+40000+8700+4500 = 132250

Public Safety = 44500+21900+6300+(12700-3400)+(24100*(1-20%))+9600 = 110880

Health and Sanitation = 29400+4800+10100+13500+9900 =67700

Property taxes = 440000+(99800*90%) = 529820

Investments (Gain) = 110,000-132,100 = 22100

Part B-2

CITY OF WILLIAMSON

BALANCE SHEET

Governmental Funds

December 31, 2017

	General:	Total government funds
Assets
Cash and cash Equivalents	113900	113900
Prepaid expenses	3400	3400
Investments	132100	132100
Receivables (net)	89820	89820
Inventories	4820	4820
Total Assets	344040	344040
Liabilities
Salaries payable	24000	24000
Fund Balances
- Reserved for encumbrances	16000	16000
- Reserved for inventories	4820	4820
- Reserved for prepaid expenses	3400	3400
- Unreserved	295820	295820
Total Fund Balances	320040	320040
Total Liabilities and Fund Balances	344040	344040

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