At the beginning of fiscal year 2014, the City of Wooster established a central supplies storehouse to service its several funds. The general fund contributed $25,000,000 (nonrefundable) to aid in the establishment of the supplies storehouse. It was agreed that the storehouse would charge other funds for the purchase price of supplies plus 20%. During the year, the storehouse purchased $20,000,000 of supplies, paid operating expenses of $2,000,000, and billed other funds for $19,200,000. All accounts are settled except $1,500,000 remaining to be collected from the general fund for supplies billed. Required
a. Prepare the statement of revenues, expenses, and changes in net position for fiscal 2014, and the statement of net position at the end of fiscal 2014 for the central supplies storehouse.
b. State any effects of the transactions on the financial statements of the general fund of Wooster. Assume the general fund bought supplies for $12,000,000, consumed $11,700,000 of supplies, uses the purchases method, and supplies balances are significant.