EXERCISE 18-14 Determining Amounts to Report for Long-Term Liabilities On Januar

Question

EXERCISE 18-14 Determining Amounts to Report for Long-Term Liabilities On January 1, 2008, Metropolis City issued a 7%, 5-year, $100,000 general obligation bond for $96,007. The bond pays interest annually (on December 31) and was issued to yield 8%. The bond was issued in the capital projects fund, and the proceeds are to be used to build a giant ball that will drop twenty stories on New Year’s Eve. No construction has occurred. A debt service fund was created to meet the interest and principal payments. The city prepares finan cial statements on December 31 of each year. Required: Determine how the above information will be reflected on each of the following statements for the year 2008 1. The governmental funds’ statement of revenue, expenditures, and changes in fund bal ances. List the governmental fund and then list the dollar amount within the appropriate heading on the statement (such as Revenues, Expenditures, or Other Financing Sources(Uses)). 2. The government-wide statement of net assets. 3. The government-wide statement of activities.

Explanation / Answer

Government Funds Statement of revenue, expenditures, and changes in fund balances. For the year ended General Fund Capital Project Fund Debt Service Fund Total Government Fund Revenues Expenditures Interest $7,000 $100,000 Other Financing Sources(Uses)) Bond Issue Proceeds $96,007 $96,007 Statement of Net Assets—Government-wide Basis Total Govt. Activities Business Type Activities Total Assets Cash $96,007 - Liabilities Payables $100,000 Long-term Liabilities Due within 1 year $7,000 The statement of activities is not required .

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