The City of Pfeiffer starts the year of 2017 with the General Fund and an enterprise fund.

The General Fund has two activities: education and

parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city
utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new
$600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic
auditorium for entertainment and other cultural affairs.

The following transactions for the city take place during 2017. Assume that the city’s fiscal year ends on December 31.

a. Decides to build a municipal park and transfers $70,000 into a capital projects fund and immediately expends $20,000 for a piece of land.
The creation of this fund and this transfer were made by the highest level of government authority.

Governmental Activities – Parks and Recreation Debit Credit

Land 20,000

Cash 20,000

b. Borrows $110,000 cash on a long-term bond for use in creating the new municipal park.

Governmental Activities – Parks and Recreation Debit Credit

Cash 110,000

Bond Payable 110,000

c. Assesses property taxes on the first day of the year. The assessment, which is immediately enforceable, totals $600,000. Of this amount,
$510,000 will be collected during 2017 and another $50,000 is expected in the first month of 2018. The remainder is expected about halfway
through 2018.

Governmental Activities – Parks and Recreation Debit Credit

Cash 510,000

Property Tax Receivable 90,000

General Revenues-Property Taxes 600,000

d. Constructs a building in the park in (b) for $80,000 cash for playing basketball and other sports. It is put into service on July 1 and should last
10 years with no salvage value.

Governmental Activities – Parks and Recreation Debit Credit

Building 80,000

Cash 80,000

Depreciation = $80,000/10 Years x ½ = $4,000

Governmental Activities – Parks and Recreation Debit Credit

Expenses-Depreciation 4,000

Accumulated Depreciation 4,000

 e. Builds a sidewalk around the new park for $10,000 cash and puts it into service on July 1. It should last for 10 years, but the city plans to
keep it up to predetermined quality level so that it will last almost indefinitely.

Governmental Activities – Parks and Recreation Debit Credit

Sidewalk 10,000

Cash 10,000

f. Opens the park and charges an entrance fee of only a token amount so that it records the park, therefore, in the General Fund. Collections
during this first year total $8,000.

Governmental Activities – Parks and Recreation Debit Credit

Cash 8,000

Program Revenues-Park 8,000

g. Buys a new parking deck for $200,000, paying $20,000 cash and signing a long term note for the rest. The parking deck, which is to go into
operation on July 1, is across the street from the civic auditorium and is considered part of that activity. It has a 20-year life and no salvage
value.

Business-type Activities-Civic Auditorium Debit Credit

Parking Deck 200,000

Cash 20,000

Notes Payable 180,000

Depreciation = $200,000/20 Years x ½ = $5,000

Business-type Activities-Civic Auditorium Debit Credit

Expenses-Depreciation 5,000

Accumulated Depreciation 5,000

h. Receives a $100,000 cash grant for the city school system that must be spent for school lunches for the poor. Appropriate spending of these
funds is viewed as an eligibility requirement of this grant. During the current year, $37,000 of the amount received was properly spent.

Governmental Activities – Parks and Recreation Debit Credit

Cash 100,000

Deferred Revenues 100,000

Expenses-School Lunches 37,000

 Cash 37,000

Deferred Revenue 37,000

Program Revenues-Operating Grant 37,000

I. Charges students in the school system a total fee of $6,000 for books and the like. Of this amount, 90 percent is collected during 2017 with
the remainder expected to be collected in the first few weeks of 2018.

Governmental Activities – Education Debit Credit

Cash 5,400

Receivables-School Fees 600

Program Revenues – School Fees 6,000

j. Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method.

Governmental Activities – Education Debit Credit

Supplies 22,000

Cash 22,000

Expenses-Supplies 17,000

Supplies 17,000

k. Receives a painting by a local artist to be displayed in the local school. It qualifies as a work of art, and officials have chosen not to capitalize
it. The painting has a value of $80,000. It is viewed as inexhaustible.

Governmental Activities – Education Debit Credit

Expenses - Art 80,000

Program Revenues-Capital Gift 80,000

l. Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution.

Governmental Activities – General Debit Credit

Transfers 20,000

Cash 20,000

Business-type Activities-Civic Auditorium Debit Credit

Cash 20,000

Transfers 20,000
m. Orders a school bus for $99,000.

There is not entry for the school bus order (n/a)

n. Receives the school bus and pays an actual cost of $102,000. The bus is put into operation on October 1 and should last for five years with
no salvage value.

Governmental Activities – Education Debit Credit

School Bus 102,000

Cash 102,000

Depreciation = $102,00/5 Years x 3/12 = $5,100

Governmental Activities – Education Debit Credit

Expenses-Depreciation 5, 100

Accumulated Depreciation 5, 100

o. Pays salaries of $240,000 to school teachers. In addition, owes and will pay $30,000 during the first two weeks of 2018. Vacations worth
$23,000 have also been earned but will not be taken until July 2018.

Governmental Activities – Education Debit Credit

Expenses - Salaries 270,000

Expenses - Payables 23,000

Cash 240,000

Salary Payable 30,000

Vacations Payable 23,000

p. Pays salaries of $42,000 to city auditorium workers. In addition, owes and will pay $3,000 in the first two weeks of 2018. Vacations worth
$5,000 have also been earned but will not be taken until July 2018.

Business-type Activities-Civic Auditorium Debit Credit

Expenses – Salaries 45,000

Expenses – Payables 5,000

Cash 42,000

Salary Payable 3,000

Vacations Payable 5,000

q. Charges customers $130,000 for the rental of the civic auditorium. Of this balance, collected $110,000 in cash and will collect the remainder
in April 2018.
Business-type Activities-Civic Auditorium Debit Credit

Cash 110,000

Rent Receivable 20,000

Program Revenues-Rent 130,000

r. Pays $9,000 maintenance charges for the building and sidewalk in (d) and (e)

Governmental Activities – Parks and Recreation Debit Credit

Expenses - Maintenance 9,000

Cash 9,000

s. Pays $14,000 on the bond in (b) on the last day of 2017: $5,000 principal and $9,000 interest.

Governmental Activities – Parks and Recreation Debit Credit

Expenses - Maintenance 9,000

Bond Payable 5,000

Cash 14,000

t. Accrues interest of $13,000 on the note in (g) as of the end of 2017, an amount that it will pay in June 2018.

Business-type Activities-Civic Auditorium Debit Credit

Expenses - Interest 13,000

Interest Payable 13,000

u. Assumes that a museum that operates within the city is a component unit that will be discretely presented. The museum reports to city
officials that it had $42,000 of direct expenses this past year and $50,000 in revenues from admission charges. The only assets that it had at
year-end were cash of $24,000, building (net of depreciation) of $300,000, and a long-term liability of $210,000.

There is not entry for the museum since it is a separate entity and has no impact on the school system.

A new school building costing $1 million. The city utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The
enterprise funds a new $600,000 civic auditorium with a 30-year life and no salvage value.

(1) School Building Depreciation = $,1000,000/20 years = $50,000

(2) School Building Depreciation = $, 600,000/30 years = $20,000

Governmental Activities – Education Debit Credit

 Expenses-Depreciation 50,000

Accumulated Depreciation 50,000

Business-type Activities-Civic Auditorium Debit Credit

Expenses-Depreciation 20,000

Accumulated Depreciation 20,000

CITY OF P. STATEMENT OF ACTIVITIES AND GOV’T WIDE FINANCIAL STATEMENTS YEAR ENDING December 2017

GOVT’ PROG. GRANT AND GOVERNMENTA BUSINESS TOTAL COMPONEN

ACTIVITIES REVENUE GIFTS L TYPES T UNIT
EXP’S

EDUCATION $482,100 $6,000 $117,000 (359,000) (359,000)

P&R 22,000 8,000 --------- (14,000) (14,000)

($373,100)

TOTAL $504,100 $14,000 $117,000 ($373,100)

Auditorium 88.000 130,000 -------- -------- $42,000 $42,000

Total for Primary

Gov’t
$592,100 $144,000 $117,000 (373,100) $42,000 ($331,100)

Component Unit

$42,000 $50,000 $8,000

Museum

General
Revenues

Property Taxes

$600,000 $600,000

Transfers (20,000) (20,000) --------

Total General
Revenues and
Transfers

$585,000 $20,000 $600,000 0.00

Change In Net
Assets

$206,900 $62,000 $268,900 $8,000

 Net Assets,
Beginning of
Year
$1,123,000 $662,000 $1,785,000 $106,000

Net Assets, End

of Year
$1,329,900 $724,000 $,2053,900 $114,000

CITY OF P. STATEMENT OF ACTIVITIES AND WIDE FINANCIAL STATEMENTS YEAR ENDING December 2017.

Governmental Activities Business-type

Activities
Total Component Unit

Assets:

Cash $302,400 $130,000 $432,400 $24,000

Property Tax Receivable 90,000 0.00 90,000 0.00

Receivable Fees 600.00 0.00 600.00 0.00

Rent Receivable 0.00 20,000 20,000 0.00

Supplies 5,000 0.00 5,000 0.00

Land 20,000 0.00 20,000 0.00

Sidewalk 10,000 0.00 10,000 0.00

School Bus 96,900 0.00 96,900 0.00

Parking Deck (net) 0.00 195,000 195,000 0.00

Building (net) 1,026,000 $580,000 1,606,000 300,000

Total Assets: $1,550,900 $925,000 $2,475,900 $324,000

 Liabilities: Governmental Activities Business-type
Activities
Total Component Unit

Salary Payable $30,000 $3,000 $33,000 0.00

Vacation Payable 23,000 5,000 28,000 0.00

Interest Payable 0.00 13,000 13,000 0.00

Deferred Revenues 63,000 0.00 63,000 0.00

Bonds and Notes Payable

105,000 180,000 285,000 $210,000

Total Liabilities $221,000 $201,000 $422,000 $210,000

Net Assets:

Capital Assets, Less related

debt
$1,047,900 $582,000 $ 1,629,900 $90,000

Unrestricted

282,000 142,000 424,000 24,000

Total Net Assets $1,329,900 $724,000 $2,053,900 $114,000