Question

Scarlett City’s general fund activities for 2016 are summarized below. Accounts are maintained on a modified accrual basis consistent with GAAP.

Property-tax revenues	$3,000
Utilities	50
Wages and salaries	900
Transfer to debt service fund	100
Estimated revenues	3,500
State grant	800
Annual insurance premium	200
Proceeds of long-term debt	1,000
General administration	1,200
Charges for current services	600
Public safety	2,000
Reimbursement from capital projects fund	100
Fund balance, beginning of year	20,000
Other taxes	750
Sanitation	500
Sale of capital assets	400

Prepare in good form a statement of revenues, expenditures, and changes in fund balance for 2016 for the city’s general fund. Assume that the city reports revenues by source and expenditures by function. Assume also that 75 percent of the wages and salaries are attributable to public safety and 25 percent to general administration. Insurance is attributable in total to general administration.

Answer 1

Statement of Scarlett City’s Expenses and Revenues
City Expenses	Program Expenses	Program Revenue
Property-tax revenues		3,000
Utilities	50
Wages and salaries	900
Estimated revenues		3,500
State grant		800
Annual insurance premium	200
Proceeds of long-term debt	1,000
General administration	2,075
Charges for current services	600
Public safety	3,350
Other taxes	750
Sanitation	500
Sale of capital assets		400
Total	9425	7700
Scarlett City’s Fund Statement
Name of Fund	Amount
Fund balance, beginning of year	20,000
Transfer to debt service fund	100
Reimbursement from capital projects fund	100
Total	20,200

Notes
1	Increased public safety expenses by 75% of wages and salaries expenes
2	General expenes increased by 25%
3	Insurance included in general administration