In addition, the business borrows $60,000 from a local bank for working capital. The loan is a nonrecourse debt. Determine the gain or loss the owners must recognize from the transfers and their basis in the ownership interest received under the assumptions set forth here. Also, determine any gain or loss recognized by the business entity from the transfers and its basis in the property received:
a. The business is organized as a partnership.
b. The business is organized as a corporation.
c. The business is organized as an S corporation.

Additional Information
1. The Duncanville School District has a separately elected school board that governs the school district. By law, all school board members must reside within the Duncanville city limits. The district establishes its own budget, but its property tax levy must be approved by the Duncanville City Council. The city does not guarantee the debt of the schools or have any other authority over the school district.
2. The Greater Duncanville Natural Gas Cooperative is governed by a seven-member board. The city appoints the seven members of the utility’s governing board and can remove them at will. The city approves the cooperative’s budget as well as its rate structure. The utility cannot issue bonded debt without the city council’s approval. The city is entitled to, and regularly receives, the operating surpluses of the utility.
3. The Duncanville Library District owns and operates all public libraries in the City of Duncanville. The members of the Duncanville City Council are designated by the District’s charter as the board members of the Duncanville Library District. The district receives most of its funding from the city, and the city guarantees the district’s long-term indebtedness.
4. The Duncanville Financing Authority’s governing board is appointed by the city council. The Authority provides the financing for most of the city’s water and wastewater projects. The Authority’s resources come from lease agreements with the Water and Sewer Department of the City of Duncanville. The Authority does not provide financing arrangements for any other entities.
The funds and other accounts that each of these four entities uses for accounting and financial reporting (in its separate report) are as follows:
• Duncanville School District—General Fund, Special Revenue Fund, Capital Projects Fund, General Capital Assets and General Long-Term Liabilities accounts
• Greater Duncanville Natural Gas Cooperative—Enterprise Fund
• Duncanville Library District—General Fund, Special Revenue Fund, Permanent Fund,
General Capital Assets and General Long-Term Liabilities accounts
• Duncanville Financing Authority—Enterprise Fund

Required
1. Prepare a 10-column work sheet for fiscal year 2011, starting with the unadjusted trial balance and including adjustments based on these additional facts:
a. The supplies available at the end of fiscal year 2011 had a cost of $3,420.
b. The cost of expired insurance for the fiscal year is $4,095.
c. Annual depreciation on equipment is $11,000.
d. The April utilities expense of $580 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $580 amount owed needs to be recorded.
e. The company’s employees have earned $1,500 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $1,400.
g. Additional property taxes of $500 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
h. The long-term note payable bears interest at 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2011 fiscal year. The $250 accrued interest for April has not yet been paid or recorded. (The company is required to make a $5,000 payment toward the note payable during the 2012 fiscal year.)
2. Use information on the accounting adjustments and the resulting balances entered into the work sheet in part 1 to journalize the adjusting and closing entries.
3. Prepare the income statement and the statement of retained earnings for the year ended April 30, and the classified balance sheet as of April 30, 2011.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet.
Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
a. Assume the adjustment for expiration of the insurance coverage consisted of a credit to Prepaid Insurance for $2,405 and a debit for $2,405 to Insurance Expense.
b. When the adjusted trial balance in the work sheet is completed, assume that the $2,100 Repairs
Expense account balance is extended to the Debit column of the balance sheet columns.