The following transactions relate to the General Fund of the city of Lost Angel

Question

The following transactions relate to the General Fund of the city of Lost Angel for the year ending December 31, 2008. Prepare a statement of revenues, expenditures, and other changes in fund balance for the General Fund for the for the period to be included in the fund-based financial statements. Assume that the fund balance at the beginning of the year was $180,000. Assume also that the purchases method is applied to the supplies and that receipt within 60 days is used as the definition of available resources.

a. Collected property tax revenue of $700,000. A remaining assessment of $100,000 will be collected in the subsequent period. Half of that amount should be collected within 30 days, and the remainder will be received in about 5 months after the end of the year.

b. Spent $200,000 on two new police cars with 10 year lives. A price of $207,000 had been anticipated when the cars were ordered. The city calculates all depreciation using the straight line method with no salvage value. The half year convention is used.

c. Transferred $90,000 to a debt service fund.

d. Issued a long term bond for $200,000 on July 1. Interest at a 10 percent annual rate will be paid each year starting on June 30, 2009.

e. Ordered a new computer with a five year life for $40,000.

f. Paid salaries of $30,000. Another $10,000 will be owed at the end of the year but will not be paid for 30 days.

g. Received the new computer but at a cost of $41,000; payment to be made in 45 days.

h. Bought supplies for $10,000 in cash.

i. Used $8,000 of the supplies in (h).

Explanation / Answer

City Of Lost Angel General Fund Statement of Revenues, Expenditures, and Other changes in Fund For the year ending December 31, 2008 Revenues      Property Tax collected          700,000       700,000 Expenditures      Salaries            30,000      Supplies            10,000      Depreciation On Plice cars            10,350          50,350 Excess of revenue over expenditure       649,650 Beginning Fund Balance       180,000 Add:      Excess of revenue over expenditure          649,650      Issued a long term bond @10%          200,000    1,029,650 Less:      Transferred to debt servie fund            90,000      Police cars          207,000      Computers            41,000       338,000 Closing Fund Balance       691,650

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