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. a-2. Prepare a statement of net position for governmental activities for December 31, 2017.

Answer 1

CITY OF WILLIAMSON

STATEMENT OF ACTIVITIES

For Year Ended December 31, 2017

		Program Revenues			Net (Expense) Revenue and Changes in Net Assets
Functions/Programs	Expenses	Charges for services	Operating grants and contributions	Capital grants and contributions	Governmental activities	Business-type activities	Total
Governmental activities
General Governmental	149000	5000		14000	(130000)		(130000)
Public Safety	90000	3000			(87000)		(87000)
Health and Sanitation	70000	42000			(28000)		(28000)
Interest on debt	16000				(16000)		(16000)
Total Governmental activities	325000	50000		14000	261000		261000
		General Revenues:
		Property taxes			401000
		Franchise taxes			42000
		Investments (Gain)			13000
		Total general revenues, transfers, and special items:			456000
		Change in net assets			195000
		Net assets – beginning			0
		Net assets – ending			195000

General Governmental = 66000+11000+21000+8000+4000+13000+14000+ 12000 (120000/10) = 149000

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

Health and Sanitation = 22000+3000+9000+12000+8000+(80000/5) =70000

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

Investments (Gain) = 90000-103000 = 13000

               

Part A-2

CITY OF WILLIAMSON

STATEMENT OF NET ASSETS

December 31, 2017

Primary Government                         

	Governmental Activities	Business-type Activities	Total
Assets
Cash and cash Equivalents	62000		62000
Prepaid expenses	2000		2000
Investments	103000		103000
Receivables (net) (90000*90%)	81000		81000
Inventories (15000*20%)	3000		3000
Capital assets (net) (120000-12000)+(80000-16000)	172000		172000
Total Assets	423000		423000
Liabilities
Salaries payable (4000+7000+8000)	19000		19000
Compensating absences Liabilities	13000		13000
Noncurrent Liabilities (200000-4000)	196000		196000
	228000		228000
Net assets
Invested in capital assets, net of related debt (172000-196000)	(24000)		(24000)
Unrestricted (deficit)	219000		219000
Total Net Assets	195000		195000