In: Accounting
Chapter 9 Adjusting and Closing Entries for Governmental Activities, Government-wide Level; Preparation of Government-wide and Major Fund Financial Statements
Based on general capital assets assigned to specific functions, depreciation expense related to equipment and infrastructure is allocated to functions as shown below:
Equipment Infrastructure
General Government $ 53,320
Public Safety 213,408
Public Works 138,715 $ 98,620
Health and Welfare 53,320
Culture and Recreation 74,357
Totals $533,120 $ 98,620
In addition, depreciation expense for buildings in the amount of $188,900 is allocated to functions according to the percentage of total floor space of buildings used by each function. The Public Works director has provided the following information for the current year:
Percentage of Building
Floor Space Used
General Government 20%
Public Safety 35
Public Works 22
Health and Welfare 10
Culture and Recreation 13
Total 100%
Required: [Para. 9-a] Record depreciation expense for the year 2020 in the governmental activities general journal at the government-wide level. Verify accuracy of the adjusting entries and post to the general ledger by clicking [Post entries].
b. Closing Entries. Although closing entries were made in each fund in Chapters 4 through 6 of this cumulative problem, they have not yet been recorded at the government-wide level.
Required: Record the journal entries required on December 31, 2020, to close all temporary accounts for governmental activities at the government-wide level. These entries should also recognize changes in the accounts Net Position—Net Investment in Capital Assets, Net Position—Restricted for Public Safety (see General Fund), Net Position—Restricted for Capital Projects (see Capital Projects Fund to calculate net position), and Net Position—Restricted for Debt Service (see Debt Service Fund to calculate net position). (Note: Be sure to deduct accrued interest on long-term debt in calculating the December 31, 2020 balance of Net Position—Restricted for Debt Service. If accrued interest is greater than net position there is no restriction on net position.) For each account to be closed or reclassified, be sure to click on the checkbox for [Closing entry] to select it. The [Closing Entry] checkbox appears next to the [Add credit] field. Post the closing entries to the general ledger by clicking on [Post entries].
[Notes: The City of Smithville is a primary government and has no other organizations for which it is accountable as component units. Also, the FY 2021 financial information for the Street Improvement Debt Service Fund is not included in any of the basic financial statements you are preparing, as the statements you are preparing pertain only to FY 2020.]