Reference no: EM131422841

For years beginning January 1, 2015, Jerry City will finance its parks and recreation activities with a special property tax levy.   Therefore, it will account for resources related to parks and recreation in a special revenue fund. 

Required:

a. Prepare journal entries for the transactions that are listed below to summarize the transactions that affected the special revenue fund in 2015.

b. Prepare a statement of revenues, expenditures, and changes in fund balance and a balance sheet for the Parks and Recreation Fund as of December 31, 2015.

c. Indicate any assets, liabilities that would be reported in the city's schedules of capital assets, or long-term obligation as a consequence of the transactions engaged in by the Parks and Recreation Fund.

d. Comment on how each of the transactions would be reported on the city's government-wide statements.

During 2015 Jerry City will engage in the following transactions:

1. The fund received $6 million from the city's special parks and recreation property tax levy.

2. During the year the parks and recreation employees earned $4.5 million in wages and salaries. Of this amount, the city paid $4.1 million in 2015 and is to pay the balance early in 2016.

3. Parks and recreation employees earned $0.26 million in vacation leave and were paid for $0.20 million. The city estimates that it will pay the entire balance in the future.

4. The employees earned $0.17 million in sick leave but were paid for only $0.14 million. The leave accumulates but does not vest.

5. According to city actuaries, employees earned $0.37 million in pensions.  However, the city had budgeted only $0.30 million.  During the year it contributed to its pension fund $0.25 million and plans to contribute an additional $0.05 million in early January 2, 2016.

6. During 2015 the city ordered $0.80 million in parks and recreation supplies.  Of this amount, it received $0.70 million, used $0.55 million, and paid for $0.50 million. The city uses the purchases method to account for supplies inventory.

7. In January 2015 the city purchased $1 million in parks and recreation equipment.  It paid $0.20 million in cash and gave an installment note for the balance.  The first payment on the note ($0.30 million plus interest of $0.05 million) is due on January 12, 2016.

8. In December 2015, the City approved, and made payment on, a grant to the local food bank for $.15 million. The grant could be applied to the food bank costs only in the calendar year 2016.  At the time of payment the food bank had met all eligibility requirements other than the time requirement. Account for the grant as a Grant Paid in Advance (Deferred Outflow of Resources).