Question;8?C. Assemble the following from;previous continuous problems: (1) the governmental funds Balance Sheet and;Statement of Revenues, Expenditures, and Changes in Fund Balances from Section;5?C, (3) the proprietary funds Statement of Net Assets and Statement of;Revenues, Expenses, and Changes in Fund Net Assets from Section 6?C.;Required;Start;a worksheet for adjustments, using the trial balance format illustrated in;the text (i.e. list accounts with debit balances first, then accounts with;credit balances). Enter the balances from the governmental funds financial;statements prepared for Section 5-C. Enter debits balances as positives;and credit as negatives. When doing this, follow the following guidelines;Net Assets:Use;a single account for net assets (which will include thebeginning;balance of all fund balance accounts).;Intergovernmental;Revenues:When setting up the worksheet, set up;separate lines for the intergovernmental revenues as follows;State;Grant for Highway and Street Maintenance;$ 975,000;Capital;Grant?General Government;250,000;Capital;Grant?Public Safety;250,000;Grant;for Law Enforcement Programs;288,000;Capital;Assets:It is not necessary to set up separate;lines for differentclasses of fixed assets or accumulated depreciation;(simply use one row for Capital Assets and another for Accumulated;Depreciation).;Confirm that the total debits and;credits equal $19,237,240.;2.;Prepare worksheet;entries and post to the worksheet for the following items. Identify each;adjustment by the letter used in the problem;a. Record;the January 1, 2012 balances of general fixed assets and related accumulated;depreciation accounts. The City of Everlasting Sunshine had the following;balances (excluding Internal Service Funds);Accumulated;Cost;Depreciation;Land;5,125,000;-;Buildings;30,200,000;12,100,000;Improvements Other than Buildings;20,000,000;8,200,000;Equipment;8,375,000;4,800,000;Totals;63,700,000;25,100,000;15;Continuous;Problem ? City of Everlasting Sunshine;b. Eliminate;the capital expenditures shown in the governmental funds Statement of Revenues;Expenditures, and Changes in Fund Balances.;c.;Depreciation expense (governmental;activities) for the year totaled $ 2,592,500.;d. Eliminate;the other financing sources from the sale of bonds by recording a liability for;bonds payable and the related premium.;e. As of;January 1, 2012, the City of Everlasting Sunshine had $6,000,000 in general;obligation bonds outstanding.;f.;Eliminate the expenditures for bond;principal.;g.;Accrue interest in the amount of;$328,000. (Two bond issues were outstanding, interest payments for both were;last made on July 1, 2012. The computation is as follows: ($5,600,000 ?.06 ?6/12) +;($4,000,000 ?. 08 ?6/12) = $328,000).;h.;Adjust for the interest;accrued in the prior year government-wide statements, but recorded as an;expenditure in the 2012 fund basis statements, ($6,000,000 ?.06;?;6/12) = $180,000.;i.;Amortize bond premium in the amount of;$2,500.;j. Make;adjustments for additional revenue accrual. The only adjustment is for property;taxes to eliminate the current year deferral of property taxes.;k. Adjust;for the $20,000 of property taxes that was deferred in 2011 and recognized as;revenue in the 2012 fund-basis statements.;l.;Assume the City adopted a policy in 2012;of allowing employees to accumulate compensated absences. Make an adjustment;accruing the expense of $ 316,000 Charge compensated absences expense.;m. Bring;in the balances of the internal service fund balance sheet accounts. Again, use;a single account for all capital assets and a second account for all;accumulated depreciation balances (use a separate column of the worksheet to;enter Internal Service Fund entries).;n.;No revenues from internal service funds;were with external parties. Assume;$13,200;of the $21,200 ?Due from Other Funds? in the internal service accounts;represents a receivable from the General Fund and the remaining $8,000 is due;from the enterprise fund. Eliminate the $13,200 interfund receivables.;o. Reduce;governmental fund expenses by the net operating profit of internal service;funds. As the amount is small, reduce general government expenses for the;entire amount.;p.;Eliminate transfers;that are between departments reported within governmental activities.;3. Prepare;in good form, a Statement of Activities for the City of Everlasting Sunshine;for the Year Ended December 31, 2012. For purposes of this statement, assume;$ 288,000 in the;General Fund is a state grant specifically for law enforcement programs.;$ 975,000 in the;Street and Highway Fund is an operating grant specifically for certain highway;and street expenses.;$;500,000 in the City Hall Construction Fund is a capital grant that applies;one-half to general government and one-half to public safety.;16;Continuous;Problem ? City of Everlasting Sunshine;Use;the balances computed from the worksheet completed in part 2 for the;governmental activities portion of the statement. Use the solution to P6?C;(Enterprise fund) to prepare the business activities portion (net any;short-term interfund payables/receivables).;4. Prepare;in good form, a Statement of Net Assets for the City of Everlasting Sunshine as;of December 31, 2012. Group all capital assets, net of depreciation. Include a;breakdown in the Net Assets section for (a) capital assets, net of;related debt, (b) restricted, and (c) unrestricted. For purposes;of classifying net assets for the governmental activities, assume;For the;governmental activities net assets invested in capital assets, net of related;debt, the related debt includes the bonds payable, the premium onbonds;payable, and the $20,000 advance from the water utility fund.;The special revenue;fund resources are restricted by the granting agency for street and highway;maintenance. These ($ 338,200) are the only restricted resources in the;governmental activities.;5. Prepare;the reconciliation necessary to convert from the fund balance reported in the;governmental funds Balance Sheet to the net assets in the government-wide;Statement of Net Assets.;6. Prepare;the reconciliation necessary to convert from the change in fund balances in the;governmental funds Statement of Revenues, Expenditures, and Changes in Fund;Balances to the change in net assets in the government-wide Statement of;Activities.
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