Question

As of January 1, 2020, the City of Summerhaven began a municipal bus operation. The adjusted trial balance below was prepared as of December 31, 2020:

                                                                                                  Debits        Credits

Cash                                                                                 $      45,000      $

Investments                                                                              85,000

Supplies                                                                                    20,000

Restricted Assets                                                                      30,000

Land                                                                                        100,000

Land Improvements                                                               200,000

Accumulated Depreciation-Land Improvements                                             10,000

Building                                                                                   400,000

Accumulated Depreciation-Building                                                                20,000

Buses                                                                                       500,000

Accumulated Depreciation-Buses                                                                    50,000

Accounts Payable                                                                                             45,000

Salaries Payable                                                                                                15,000

Interest Payable                                                                                                10,000

General Obligation Bonds Payable                                                               800,000

Other Financing Sources-transfer in                                                             400,000

Revenues—charges for services                                                                    360,000

Dividend and interest income                                                                            10,000

Fuel and Supplies Expense                                                        60,000

Salaries Expense                                                                       120,000

Utilities Expense                                                                           50,000

Depreciation Expense                                                                 80,000

Interest Expense                                                                          30,000           _________

Totals                                                                                 $1,720,000       $1,720,000

Additional information:

Ø A transfer of $400,000 was received from the general fund in January, 2020, and was used to acquire capital assets.

Ø General obligation bonds with a face value of $800,000 were sold for $800,000 on March 31, 2020. The bonds pay interest at 5% on March 31 and September 30. The bonds were used to acquire capital assets.

Ø The bond indenture requires that Summerhaven set aside assets for the payment of bond principal. The general obligation bonds are serial bonds, and the first serial payment will not be paid until 2023. Restricted assets consist entirely of investments.

3   Prepare the statement of net position at December 31, 2020.

4   Prepare the capital and related financing activities section of the statement of cash flows for the year ended December 31, 2020.

Please help with problems 3 and 4

Answer 1

I have prepared statement of Net position and Capital(investing) and related financial activities section of Cash Flows for the year ended December 31, 2020. Hope it will help you to understand -

3.

Statement of Net Position for City of Summerheaven   as at Dec 31,2020
Particlulars		Amount ($)
Assets
Cash	45,000
Supplies	20,000
Investmensts	85,000
Restricted Assets	30,000
Capital Assets	1,200,000
Less : Accumulated Depreciation	(80,000)
Total Liabilities (B)		1,300,000
Liabilities
Current Liabilities
Accounts Payable	45,000
Salaries Payable	15,000
Interest Payable	10,000
Non Currnt Liabilities
Excess of income over expenditure accumulated	30,000
Bonds Payable	800,000
Other Financing Sources	400,000
Total Assets (A)		1,300,000
Net Position
Net investment in capital Assets	1,120,000	-
Restricted Assets	30,000
Unrestricted	150,000
		1,300,000

Statement of Net Position for City of Summerheaven   as at Dec 31,2020
Statement of Activities
	Expenses	Receipts	Net
Charges for Service        (A)		360000	360000
Fuel & Supplies Expenses	60000
Salaries Expenses	120000
Utilities Expenses	50000
Depreciation Expenses	80000
Interest Expenses	30000
Total Expenses (B)	340000		340000
Net Revenue /( Expenses)			20000
Add: Dividend & Interest Income	10000	10000
Net Position			30000

4.

City of Summerheaven
Statement of Cash Flows
For the year ended on December 31,2020
	Particulars	Amount ( in $)
(B)	Cash Flow from Investing Activities
	Investments in Capital Assets	(1,200,000)
	Investments in Restricted Assets	(20,000)
	Increase in other investments	(85,000)
	Dividend/Interest received	10,000	(1,295,000)
(C)	Cash Flow from Financing Activities
	Transfer from General Fund	400,000
	Receipts from sale of general obligation Bonds	800,000
	Payment of Interest	(30,000)	1,170,000
	Cash in hand as on December 31,2020
Note :
1	It is assumed that restriced assets are also invested as investments.
2	Investment in capital assets
	Land	100,000
	Imprivement in Land	200,000
	Building	400,000
	Bus	500,000
		1,200,000