Dear Andrew: I post another governmental accounting question from Becker's final review.

Q: The city of Thayer Point reported revenues over expenditures of $25,000 for all governmental funds for the year ended December 31, year 2. The city had capital outlay of $600,000 patially funded by debt proceeds of $500,000 at December 31, year 2. The city paid $219,000 of debt service expenditures during the year 2 comprised of principal payments of $100,000 and interest payments of $119,000. Interest of 4 percent is due every six months on April 1 and October 1 on total debt reported at December 31, year 1 of $3,000,000. The increase (decrease) in net assets to be reported for the City's governmental activities displayed on their government-wide Statement of Activities is :
a. $226.000
b. $225,000
c. $224,000
d. $125,000
The answer is c $224,000.

Becker's explanation:
Net changes in fund balance: 25,000
Other financial sources
Debt proceeds (500,000)
Expenditures
Capital outlay 600,000
Principal payment on debt 100,000
Total expenditures 700,000

Basis of accounting
Expense
Prior year accrual
Balance at year 1 3,000,000
Interest rate 4%
Accrual interest, 3 months (30,000)

Current year accrual 3,000,000
Less principal payment (100,000)
Balance at year 2 2,900,000
Interest rate 4%
Accrual period, 3 months 29,000
Government-wide change in net assets $224,000

I checked Becker's last year Dvd, the answer is a.($226,000)
not c ($224,000). I think last year's answer is more reasonable than this year's answer.