Harlan City, a small city with revenues less than $ 10,000,000 a year, is planning to issue its first set of GAAP financial statements for the year ended December 31, 2013. To prepare for the transition, the city comptroller wants to have a government- wide statement of net position as of January 1, 2013, the beginning of the year. The available information includes extracts from the governmental funds portion of the balance sheet prepared as of December 31, 2012, together with other data necessary to prepare a government- wide statement of net position for governmental activities, using the economic resources measurement focus and accrual basis of accounting.
The balance sheet for the combined governmental funds as of December 31, 2012, is as follows:

Assets Cash................... $175,000 Property taxes receivable........... 85,000 Total assets ............... $260,000
Liabilities Accounts payable ............. $43,000 Accrued salaries and other expenses..... 14,000 Total liabilities.............. 57,000 Deferred Inflows of Resources
Deterred property tax revenues........ 18.000 Fund Balances
Unassigned ............... 185,000 Total liabilities, deterred Inflows
of resources, and fund balances....... $260,000
The following additional information is available as of December 31, 2012: Capital assets: Harlan’s capital asset records show that the total cost of the assets in use as of December 31, 2012, is $ ofDecem-ber31,2012,is$ 8,400,000. Estimated accumulated depreciation on the assets is $ 4,600,000. Bonds payable: Harlan has outstanding bonds payable of $ 2,600,000 as of December 31, 2012. Of this amount, principal due to be paid during the calendar year 2013 is $ 150,000. Analysis of the outstanding bonds shows that all of the debt was used to finance the acquisition of capital assets. Interest on long- term debt: In its fund statements, Harlan recognizes interest on bonds payable when it is due and payable. It does not accrue interest for year- end stub periods that will be paid early in the following year. Stub period interest as of December 31, 2012, was $ 20,000. Property taxes: Harlan expects that all of its property taxes receivable will be collected in 2013. Property tax revenues of $ 18,000 were deferred because Harlan did not expect to collect them during the first 60 days of 2013.
Other expenses: Employees may accumulate vacation pay, subject to certain limits, that they may receive in cash on retirement. Accrued expenses of $ 14,000 include $ 2,000 of accrued vacation pay that the city will pay early in 2013 to retired employees. Other employees have accumulated vacation pay of $ 42,000 that Harlan expects to pay when they retire in future years. No accrual has been made for this amount.
Use the preceding information to do the following:
a. Prepare a six- column work sheet similar to that shown in Table 10- 8 , providing the balances in the fund accounts, the adjusting entries needed to prepare a government- wide statement of net position as of January 1, 2013, and the adjusted balances. Make the adjustments needed to prepare a government- wide statement of net position, and support the adjustments with journal entries.
b. Prepare a statement of net position as of January 1, 2013, in classified format. Show the net position either as invested in capital assets, net of related debt or as unrestricted.
c. Prepare a reconciliation of the funds balance sheet to the government- wide statement of net position.

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