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Question: A city has only one activity, its

A city has only one activity, its school system. The school system is accounted for within the general fund. For convenience, assume that, at the start of 2020, the school system and the city have no assets. During the year, the city assesses property taxes of $400,000. Of this amount, it collects $320,000 during the year, collects $50,000 within a few weeks after the end of the year, and expects the remainder to be collected about six months later. The city makes the following payments during 2020: salary expense, $100,000; rent expense, $70,000; equipment (received on January 1 with a five-year life and no salvage value), $50,000; land, $30,000; and maintenance expense, $20,000.
In addition, on the last day of the year, the city purchases a $200,000 building by signing a long- term note payable. The building has a 20-year life and no salvage value, and the liability accrues interest at a 10 percent annual rate. The city also buys two computers on the last day of the year for $4,000 each. One will be paid for in 30 days and the other in 90 days. The computers should last four years and have no expected residual value. During the year, the school system charges students $3,000 for school fees and collects the entire amount. The city determines depreciation using the straight-line method.
a. Produce a statement of net position and a statement of activities for this city’s government-wide financial statements.
b. Produce a balance sheet and a statement of revenues, expenditures, and changes in fund balance for the fund financial statements. Assume that available is defined by the city as anything to be received within 60 days.


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