A city engages in the transactions that follow For each

A city engages in the transactions that follow. For each transaction, indicate the amount of
revenue or expenditure that it should report in 2017. Assume first that the main objective of the
financial statements is to enable users to assess budgetary compliance. Then calculate the
amounts, assuming that the main objective is to assess inter period equity. The city prepares its
budget on a "modified" cash basis (that is, it expands the definition of cash to include short?term
marketable securities), and its fiscal year ends on December 31.1. Employees earned $128,000
in salaries and wages for the last five days in December 2017. They were paid on January 5,
2018.2. A consulting actuary calculated that per an accepted actuarial cost method, the city
should contribute $225,000 to its firefighters' pension fund for benefits earned in 2017.
However, the city contributed only $170,000, the amount budgeted at the start of the year.3.
The city acquired three police cars for $35,000 cash each. The vehicles are expected to last for
three years.4. On December 1, 2017, the city invested $99,000 in short?term commercial paper
(promissory notes). The notes matured on January 1, 2018. The city received $100,000. The
$1,000 difference between the two amounts represents the city's return (interest) on the
investment.5. On January 3, 2017, the city acquired a new $10 million office building, financing
it with 25?year serial bonds. The bonds are to be repaid evenly over the period they are
outstanding-that is, $400,000 per year. The useful life of the building is 25 years.6. On January
4, 2017, the city acquired another $10 million office building, financing this facility with 25?year
term bonds. These bonds will be repaid entirely when they mature on January 1, 2042. The
useful life of this building is also 25 years.7. City restaurants are required to pay a $1,200
annual license fee, the proceeds of which the city uses to fund its restaurant inspection
program. The license covers the period July 1 through June 30. In 2017 the city collected
$120,000 in fees for the license period beginning July 1, 2017.8. The city borrowed $300,000 in
November 2017 to cover a temporary shortage of cash. It expects to repay the loan in February
2018.View Solution: A city engages in the transactions that follow For each
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