1975 - Comp. Annual Financial Report
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CITY OF SHOREWOOD-LIQUOR FUND
REPORT ON EXAMINATION
FOR THE PERIOD
JANUARY I, 1975 THROUGH DECEMBER 31, 1975
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M. J. LO N G CO.
M. J. LONG CO.
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ACCOUNTANTS AND AUDITORS
TONKA BUILDING - EXCELSIOR, MINNESOTA 55331
TELEPHONE (612) 474-8826
ACCOUNTANTS' REPORT
The City Council
City of Shorewood
Shorewood, Minnesota
Gentlemen:
We have examined the balance sheet of the City of Shorewood-
Liquor Fund, a Minnesota Corporation, as of December 31, 1975 and
1974 and the related statements of income, retained earnings and
changes in financial position for the years then ended. Our
examination was made in accordance with generally accepted audit-
ing standards, and accordingly included tests of the accounting
records and such other auditing procedures as we considered nec-
essary in the circumstances except as noted in the following para-
graph. .
.
As discussed in Note 2, the City changed its method of
valuing its inventories during 1975. Because the City does not
maintain sufficient detail records to support its new pricing
method, we were unable to verify the inventory values shown on
the accompanying financial statements.
Because of the significance of the matter discussed in the
preceding paragraph, we are unable to express an opinion on the
accompanying financial statements.
Sincerely,
M. J. LONG COMPANY
By ~-~~"&':i
OJoiep J. Froeh1{n
Certified Public Accountant
Excelsior, Minnesota
June 10, 1976
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CITY OF SHOREWOOD-LIQUOR FUND
BALANCE SHEET - DECEMBER 31. 1975 AND 1974
1975
ASSETS
CURRENT
Cash, including certificates of
deposit of $23,500 in 1974
52,672.08
Receivables -
Trade Accounts
Due from General Fund
Interest
Inventories (Note 2)
Prepaid expenses
3,642.75
2,817.07
82,596.30
3.390.47
145,118.67
Total Current Assets
PROPERTY AND EQUIPMENT (NOTE 1)
Furniture and fixtures
Equipment
Leasehold improvements
15,336.37
5,562.63
3,954.99
24,853.99
18,981. 74
5,872.25
150,990.92
Less = Accumulated depreciation
Total Property and Equipment
Total Assets
LIABILITIES AND FUND BALANCE
CURRENT
Accounts payable
Payroll taxes
Sales taxes
56,133.76
1,794.46
5,180.38
63,108.60
Total Current Liabilities
FUND BALANCE
Retained earnings, per accompanying
statement
87,882.32
Total Liabilities and
Fund Balance
150,990.92
See Notes to Financial Statements
M.J.LONGCO.
1974
43,763.76
5,244.82
1,982.25
42,720.30
1,693.85
95,404.98
14,039.72
4,163.24
3,427.99
21,630.95
17,036.66
4.594.29
99,999.27
9,901. 56
747.56
1 , 060 . 61
11,709.73
88,289.54
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CITY OF SHOREWOOD-LIQUOR FUND
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31. 1975 AND 1974
INCOME
1975 1974
259,696.79 132,655.75
145,681. 39 83,533.20
28.938.32 19.380.20
434,316.50 235,569.15
343.345.16 184.334.97
90,971. 34 51,234.18
21. 0% 21. 7%
41,699.13 23,673.19
6,065.25 4,192.62
17,549.47 6,521. 77
4,577.09 2,656.29
810.71 424.18
4,151.92 2,605.07
1,593.73 140.47
1,945.08 1,549.42
3,427.00 3,115.00
1,816.78
139.82
2,100.96 488.88
462.46 187.05
255.78 537.44
828.59 195.62
87,253.95 46,426.82
3,717.39 4,807.36
875.39 1.999.96
4,592.78 6,807.32
88,289.54 81,482.22
4,592.78 6,807.32
(5.000.00)
87,882.32 88,289.54
SALES
Liquor and wine
Beer
Miscellaneous
COST OF SALES
Gross Margin
Percent to Sales
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OPERATING EXPENSES
Salaries
Payroll taxes and employee benefits
Rent
Utilities
Telephone
Insurance
Advertising
Depreciation
Accounting and auditing
Professional services
Bad debts
Supplies
Office expense
Repairs
Other
Total operating expenses
Operating income
OTHER INCOME, principally interest
Net income
RETAINED EARNINGS
BALANCE, beginning of year
ADD (DEDUCT)
Net Income
Transfers to General Fund
BALANCE, end of year
See Notes to Financial Statements
.. M.J.LONGCO.
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CITY OF SHOREWOOD-LIQUOR FUND
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED DECEMBER 31, 1975 AND 1974
1975
WORKING CAPITAL WAS PROVIDED FROM:
Opera.tions -
Net income
Add - depreciation, a non-cash
charge
4,592.78
1,945.08
6,537.86
6,537.86
Total from operations
Total Provided
WORKING CAPITAL WAS USED FOR:
Purchase of property and equipment
Transfer to General Fund
3,223.04
5,000.00
Increase (decrease) in working
capital
8,223.04
(1,685.18)
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Total Used
INCREASE IN WORKING CAPITAL WAS
REPRESENTED BY:
Increase (decrease) in current assets
Cash
Receivables
Inventories
Prepaid expenses
8,908.32
(767.25)
39,876.00
1,696.62
49,713.69
Total
(Increase) decrease in current
Accounts payable
Payroll taxes
Sales taxes
liabilities
(46,232.20)
(1,046.90)
(4,119.77)
Increase (decrease) in
Working Capital
(1,685.18)
See Notes to Financial Statements
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M. J. LONG CO.
1974
6,807.32
1,549.42
8,356.74
8,356.74
644.28
644.28
7,712.46
5,865.52
1,982.25
2,874.65
54.87
10,777.29
(3,141.44)
208.87
(132.26)
7,712.46
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CITY OF SHOREWOOD-LIQUOR FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 1975
1.
Summary of Significant Accounting Policies
Property and Equipment -
Property and Equipment is stated at cost. Additions and
improvements are capitalized while maintenance and repair
expenditures are expensed currently. Upon retirement, the
cost and related accumulated depreciation is removed from the
accounts and any gain or loss is included in income.
Depreciation is calculated on a straight line basis over
the estimated lives of the assets which are as follows:
Furniture and Fixtures 5 years
Equipment 3-10 years
Leasehold Improvements 10 years
2. Change in Accounting Method
The City changed its method of valuing inventories from
the lower of cost (first-in, first-out) or market to a modified
retail method during 1975. The impact of this change on the
current year financial statements has not been determined since
the City did not price the 1975 inventory quantities using the
first-in, first=out method.
3.
Lease Commitments
The City leases its Vine Hill store facility under a ten
year agreement to May, 1977 at annual rentals of $5,700. In
addition, the City is required to pay one half of any increase
in real estate taxes over those paid in 1966.
The City leases its Village Shopping Center store under a
three year agreement to May, 1978 at annual rentals of $14,643.
Four successive three year options to renew are available to
May, 1990. In addition, the City leases certain fixtures with
a cost of $20,000 under a fifteen year agreement to May, 1990
at annual rentals of $2,580.
M.J.LONGCO.
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CITY OF SHOREWOOD-LIQUOR FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 1975
4.
New Liquor Store
In May, 1975, the City opened a second store in the Village
Shopping Center. The balance sheet and income and expenses of
this store are included in the accompanying financial statements.
Sales for the new store were $176,948.
M. J. LO N G CO.