The City of Southern Pines maintains its books so as to prepare fund accounting statements and

prepares worksheet adjustments in order to prepare government-wide financial statements. You are to
prepare, in journal form, worksheet adjustments for each of the following situations. Use the
account titles presented during the first 4 weeks where appropriate. Use the account title referred
to in the question for all other entries (general obligation bonds = Bonds Payable).

Depreciation for the year amounted to $10,000,000 for the City of Southern Pines. Additional capital
outlay expenditures during the year amounted to $2,750,000. (2 entries 2 points).

General obligation bonds outstanding at the City of Southern Pines at the beginning of the year amounted
to $2,657,430. (1 entry 2 points)

During the year, the City of Southern Pines had debt service expenditures amounting to: interest,
$2,000,000; and principal, $20,400,000. In addition, bond discounts were amortized in the amount of
$100,000. Interest incurred on the accrual basis but not due at year-end amounted to $50,000. (3 entries
5 points)

During the year, the City of Southern Pines issued additional general obligation bonds in the amount of
$2,000,000, at 105% of par. (1 entry 2 points).

he citys only internal service fund, a print shop fund, is included in the proprietary funds statements.
Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide
statements as a part of governmental activities: - (3 Separate entries 5 points)
Exclusive of the interest expense, the internal service fund reported operating income from
interfund transactions of $120,000 for the current year. An examination of the records indicates
that services were provided to general government departments.
Balance sheet accounts include: Current Assets, $400,000; Capital Assets, $1,000,000;
Accumulated Depreciation, $500,000; Accounts Payable, $150,000; Bonds Payable, $500,000;
Net Assets, $250,000 as of year end.
The only transaction in the internal service fund during this year that is external to the
government is interest expense in the amount of $60,000.

Transfers out from the General Fund to other funds were as follows: (1 entry 2 points)
To CPF $100,000
To DSF $150,000
To EF $275,000
To ISF $125,000

The long-term liability balance for compensated absences had an ending balance of $10,750,000 at fiscal
year-end at the City of Southern Pines. Vacations that were earned this year but will be taken in future
period at the City of Southern Pines amounted to $500,000 which was included in the fiscal year-end
balance.