Case 4.4: City of Davidson
The City of Davidson engages in the following transactions during its fiscal year ending September 30, 2015. Show what impact, if any, each has on the city’s assets, liabilities, and fund balance, assuming it prepares its fund financial statements on the modified accrual basis.
- During fiscal year 2015, the City levied property taxes of $154,000, of which it collected $120,000 prior to September 2015 and $5,000 over each of the next six months. It is estimated that $4,000 will be uncollectable.
- On November 20, 2015, it received $12,000 from the state for sales taxes recorded on its behalf. The payment was for sales made in September that merchants were required to remit to the state by October 15.
- In April, the city was awarded a state training grant of $400 for the period June 1, 2015 through May 31, 2016. In fiscal 2015, the city received the entire $400 but spent only $320. Although the funds were received in advance, the city would have to return to the state any amounts that were not used to cover allowable training grants.
- The city requires each vendor who sells in its “farmers market” to obtain an annual permit. The funds generated by the sale of these permits are used to maintain the market. The permits, which cover the period from June 1 through May 31, are not refundable. In May 2015, the city issued $36 of permits.
- A few years ago, the City received a donation of a parcel of land, upon which it expected to build a new community center. During fiscal 2015, it opted to sell the land instead for $135. When acquired by the town, the land had a market value of $119.