ADVANCED ACCOUNTING
ADVANCED ACCOUNTING
4th Edition
ISBN: 9781618533128
Author: Halsey
Publisher: Cambridge Business Publishers
Question
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Chapter 10, Problem 38P

a.

To determine

Prepare the journal entries to recognize the following in government-wide financial statements for the required reconciliations:

  1. 1. Recognize capital assets of $210,630 as of the beginning of the year.
  2. 2. Record depreciation expense of $8,699 for the year and reverse expenditures of $ 11,962 for capital outlays during the year.
  3. 3. Recognize $9,000 of bonds payable as of the beginning of the year.
  4. 4. Reverse other financing sources of $2,000 and expenditures- debt payments of $700 relating to increases and decreases in the bond liability during the year.
  5. 5. Reverse deferred revenue of $27,300 as of the beginning of the year.
  6. 6. Reverse $1,365 of deferred revenue recognized during the year.
  7. 7. Recognize compensated absences of $3,988 as of the beginning of the year and an increase in that liability of$199 during the year.
  8. 8. Recognize $20 of accrued interest payable as of the beginning of the year and an increase in that liability of $33 during the year.
  9. 9. Recognize a liability of $5,482 relating to the City's landfill as of the beginning of the year. The estimate for this liability did not change during the year.

a.

Expert Solution
Check Mark

Explanation of Solution

Government-wide statements put together financial activities in one location and provide information on accrual-based economic resources. Government-wide statements shall coordinate information whether it applies to government activities or business-type operations. The Government-wide reports consist of a statement of net position and a statement of activities. The statement of net position portrays the local government as a single economic entity rather than a collection of different funds.

Statement of activities is the statement which lists the government revenues and expenses and, in some instances, the difference to show the balance between them. It is practically a running effectively regarding the government's financial condition.

The Statement of Activities presents the reporting government operations in two parts:

  • The net expense or revenue of each governmental function
  • General revenues
DateAccounting ExplanationAmount ($)Amount ($)
1.Capital assets, net$210,630 
 Net position $210,630
 (Capital assets, net at beginning of year)  
    
2.Depreciation expense$8,699 
 Capital assets, net$3,263 
 Expenditures—capital outlay $11,962
 (Change in capital assets, net)  
    
3.Net position$9,000 
 Bonds payable $9,000
 (Bonds and notes payable at beginning of year)  
    
4.Other financing sources—proceeds from bonds$2,000 
 Bonds payable $1,300
 Expenditures—debt principal payments $700
 (Change in bonds payable)  
    
5.Deferred revenues$27,300 
 Net position $27,300
 (Deferred revenues at beginning of year)  
    
6.Deferred revenues$1,365 
 Revenues $1,365
 (Change in deferred revenues)  
    
7.Net position$3,988 
 Compensated absence expense$199 
 Compensated Absences $4,187
 (To record beginning of year compensated absences and change for the year)  
    
8.Net position$20 
 Interest expense$33 
 Accrued interest $53
 (To record beginning of year accrued interest and change for the year)  
    
9.Net position$5,482 
 Landfill closure and post-closure care costs $5,482
 (Beginning of year landfill closure and post-closure care costs)  

b.

To determine

Prepare the government-wide statement of net position and identify the revenues, expenses, and net position change that should be reported in the year's statement of activities of the City, R.

b.

Expert Solution
Check Mark

Explanation of Solution

Government-wide statements put together financial activities in one location and provide information on accrual-based economic resources. Government-wide statements shall coordinate information whether it applies to government activities or business-type operations. The Government-wide reports consist of a statement of net position and a statement of activities. The statement of net position portrays the local government as a single economic entity rather than a collection of different funds.

The difference between assets of an entity plus deferred resource outflows and their liabilities plus deferred resource inflows which represents the net position is known as statements of net position of government-wide financial statements.

RECONCILIATION WORKSHEET
Governmental FundsDRCRGovernmental Activities
Balance Sheet/Statement of Net Position:
Current Assets:
Cash$32,400$2,400
Receivables:
Real Estate & Personal Property2,5202,520
Intergovernmental26,06026,060
Noncurrent:
Receivables
Capital assets, net of accumulated depreciation1199,360201,354
 21,994 
Total Assets$60,980$262,334
LIABILITIES
Payables$2,982$2,982
Accrued interest85353
Bond and notes payable37,0008,300
41,300
Compensated advances74,1874,187
Landfill closure and post-closure care costs95,4825,482
Deferred revenues28,665527,3000
 61,365 
Total Liabilities31,64721,004
FUND BALANCE 29,33329,333
Adjustments:37,0001199,360192,360
73,988527,30023,312
820(20)
95,482(5,482)
Net income adjustments below1,8271,827
NET POSITION241,330
Check:  Liabilities + Net Position = Total Assets  $262,334
Statement of Revenues, Expenditures, and Changes in Fund Balances:
Governmental ActivitiesDRCRGovernmental Activities
Total revenues—fund statements $111,384$111,384
Adjustments:
Deferred revenues61,365 1,365
Total revenues—statement of activities 112,749
Total expenditures—fund statements107,912107,912
Adjustments:
Debt principal payments4700(700)
Depreciation expense/capital outlay29,968211,962(1,994)
Compensated absences7199199
Interest expense83333
Total expenses—statement of activities105,450
Miscellaneous adjustments:
OFS—proceeds from bonds 2,000 42,0000
    
Net change in fund balances/ change in net position$5,47212,20014,027$7,299

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