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	$320,000
Franchise taxes	42,000
Charges for general government services	5,000
Charges for public safety services	3,000
Charges for health and sanitation services	42,000
Issued long-term note payable	200,000
Receivables at end of year:
Property taxes (90% estimated to be collectible)	90,000
Payments:
Salary:
General government	66,000
Public safety	39,000
Health and sanitation	22,000
Rent:
General government	11,000
Public safety	18,000
Health and sanitation	3,000
Maintenance:
General government	21,000
Public safety	5,000
Health and sanitation	9,000
Insurance:
General government	8,000
Public safety ($2,000 still prepaid at end of year)	11,000
Health and sanitation	12,000
Interest on debt	16,000
Principal payment on debt	4,000
Storage shed	120,000
Equipment	80,000
Supplies (20% still held) (public safety)	15,000
Investments	90,000
Ordered but not received:
Equipment	12,000
Due in one month at end of year:
Salaries:
General government	4,000
Public safety	7,000
Health and sanitation	8,000

Compensated absences (such as vacations and sick days) legally owed to general government workers at year-end total $13,000. 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 $14,000. 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 $103,000 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-2. Prepare a balance sheet for the general fund as of December 31, 2017. Assume that the city applies the consumption method.

Answer 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	401000	401000
Franchise taxes	42000	42000
Charges for Services	50000	50000
Investments (Gain)	13000	13000
	506000	506000
Expenditures:
Current:
General Governmental	110000	110000
Public Safety	90000	90000
Health and Sanitation	54000	54000
Debt Service:
Principal payment on debt	4000	4000
Interest on debt	16000	16000
Capital Outlay	200000	200000
Total expenditures	474000	474000
Excess (Deficiency) of revenues over expenses)	32000	32000
Other Financing Sources:
Proceeds from long-term note	200000	200000
Total other uses and sources
Net Changes in fund balance
Fund Balances (beginning)	0	0
Fund Balances (ending)	232000	232000

General Governmental = 66000+11000+21000+8000+4000 = 110000

Public Safety = 39000+18000+5000+(11000-2000)+(15000*(1-20%))+7000 = 90000

Health and Sanitation = 22000+3000+9000+12000+8000 =54000

Property taxes = 320000+(90000*90%) = 401000

Investments (Gain) = 90000-103000 = 13000

Part B-2

CITY OF WILLIAMSON

BALANCE SHEET

Governmental Funds

December 31, 2017

	General:	Total government funds
Assets
Cash and cash Equivalents	62000	62000
Prepaid expenses	2000	2000
Investments	103000	103000
Receivables (net)	81000	81000
Inventories	3000	3000
Total Assets	251000	251000
Liabilities
Salaries payable	19000	19000
Fund Balances
- Reserved for encumbrances	14000	14000
- Reserved for inventories	3500	3500
- Reserved for prepaid expenses	3400	3400
- Unreserved	285700	285700
Total Fund Balances	232000	232000
Total Liabilities and Fund Balances	251000	251000