The following balances were extracted from the books of Abobakau Local Government for the year ended 31st December 2019. Construction of an office block 3,8...
Question 1 Report
The following balances were extracted from the books of Abobakau Local Government for the year ended 31st December 2019.
| Construction of an office block | 3,850,000 |
| Renovation of classroom blocks | 1,065,500 |
| Court fines | 90,000 |
| Building permits | 650,000 |
| Rehabilitation of street lights | 470,500 |
| Wages and salaries | 7,880,450 |
| Medical services | 1,334,650 |
| Provision of pipe borne water | 2,500,000 |
| Interest on investments | 250,000 |
| Lorry park levies | 380,000 |
| Market tolls | 560,000 |
| Property rates | 1,200,000 |
| General administration | 630,700 |
| Motor vehicle procured | 6,653,000 |
| Extension of office building | 950,000 |
| Royalties | 4,500,000 |
| Subvention from Central/Fed govt | 20,000,000 |
| Grants from donor agencies | 2,000,000 |
| Donations to charity homes | 250,000 |
| Entertainment permits | 70,000 |
| Staff training | 550,000 |
| Entertainment expenses | 200,000 |
| Marriage registration fees | 80,000 |
| Allowances to community leaders | 380,000 |
| Birth certificate fees | 160,000 |
| Maintenance of motor vehicles | 650,000 |
You are reg You are required to prepare for the ended 31st December 2019
(a) Statement of Recurrent Expenditure
(b) Statement of Capital Expenditure
(c) Statement of Revenue
Answer Details
Approach. Local government accounts separate recurrent expenditure (day-to-day running costs), capital expenditure (spending that creates or improves long-lived assets/projects) and revenue (income received). Each item below is classified accordingly.
(a) Statement of Recurrent Expenditure for the year ended 31st December 2019
| Item | N |
|---|---|
| Wages and salaries | 7,880,450 |
| Medical services | 1,334,650 |
| General administration | 630,700 |
| Maintenance of motor vehicles | 650,000 |
| Staff training | 550,000 |
| Allowances to community leaders | 380,000 |
| Donations to charity homes | 250,000 |
| Entertainment expenses | 200,000 |
| Total recurrent expenditure | 11,875,800 |
(b) Statement of Capital Expenditure for the year ended 31st December 2019
| Item | N |
|---|---|
| Motor vehicle procured | 6,653,000 |
| Construction of an office block | 3,850,000 |
| Provision of pipe borne water | 2,500,000 |
| Renovation of classroom blocks | 1,065,500 |
| Extension of office building | 950,000 |
| Rehabilitation of street lights | 470,500 |
| Total capital expenditure | 15,489,000 |
(c) Statement of Revenue for the year ended 31st December 2019
| Item | N |
|---|---|
| Subvention from Central/Federal government | 20,000,000 |
| Royalties | 4,500,000 |
| Grants from donor agencies | 2,000,000 |
| Property rates | 1,200,000 |
| Building permits | 650,000 |
| Market tolls | 560,000 |
| Lorry park levies | 380,000 |
| Interest on investments | 250,000 |
| Birth certificate fees | 160,000 |
| Court fines | 90,000 |
| Marriage registration fees | 80,000 |
| Entertainment permits | 70,000 |
| Total revenue | 29,940,000 |
Note. Renovation, rehabilitation and extension are treated as capital because they enhance or restore long-lived assets. Maintenance of motor vehicles is recurrent (routine upkeep), whereas the vehicle itself is capital. Permits, fines, levies, rates, fees, royalties, grants and subventions are all revenue receipts.
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