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CHAPTER 17
CHAPTER 17GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTINGANSWERS TO QUESTIONSQ17-1A fund is an independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, reserves, and equities which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. A fund may receive resources from a variety of sources, including collection of taxes on property, income, or commercial sales; receipt of grants, fines, or licenses; and collection of service charges.
Q17-2The eleven funds generally used by local and state governments are:
Governmental
a. General fund
b. Special revenue fund
c. Capital projects fund
d. Debt service fund
e. Permanent fund
Proprietary
f. Internal service fund
g. Enterprise fund
Fiduciary
h. Pension trust fund
i. Investment trust fund
j. Private-purpose trust fund
k. Agency funds
The purpose of each fund is individually discussed below:
a.General fund: All financial resources except those required to be accounted for in another fund are accounted for in the general fund.
b.Special revenue fund: The proceeds of specific revenue sources that are legally restricted for specified purposes are accounted for in the special revenue fund.
c.Capital projects fund: Financial resources to be used for the acquisition or construction of major capital projects that will benefit a large population are accounted for in the capital projects fund.
d. Debt service fund: The accumulation of resources for, and the payment of, general long-term debt principal and interest are accounted for in the debt service fund.
e.Permanent fund: Accounts for resources for which the principal must be maintained, but for which the earnings may be used in support of governmental programs.
f.Internal service fund: The financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, are accounted for in internal service funds.
g.Enterprise fund: Operations of governmental units that charge for services provided to the general public are accounted for in the enterprise funds.
h.Pension trust fund: Resources held by a governmental unit in a trustee capacity for the members and beneficiaries of pension plans, postemployment plans, or other employee benefit plans.
i.Investment trust funds: Accounts for the external portion of investment pools of governing units.
j.Private-purpose trust fund: Accounts for trust arrangements under which both principal and interest may be used to benefit specific individuals, private organizations, or other governmental units. Note that these resources have specific purposes as stated by the donor or grantor, and are not available for general governmental programs.
k.Agency funds: Assets held by a governmental unit in an agency capacity for employees or other individuals are accounted for in agency funds.
Q17-3The modified accrual basis includes some aspects of accrual accounting and some aspects of cash-basis accounting. Under the modified accrual basis, the emphasis is on reporting how well the government performed by focusing on when the revenue and expenditures are recognized in the accounts and reported in the financial statements. The emphasis is not on how much was earned nor on the amount of expenses.
Q17-4The modified accrual basis is used for funds for which expendability is the concern because the governing entity is interested in the determination of the resources still remaining to be expended to carry out the objectives of the fund.
Q17-5Property taxes are recognized as revenue in the general fund when the taxes are levied, provided they apply to and are collectible within the current fiscal period, or within a short period (< 60 days) after the end of the fiscal period.
Q17-6GASB 33 states that taxpayer-assessed income and sales taxes should be accrued in the general fund when they become both measurable and available to finance expenditures of the fiscal period. Sales taxes held by other governmental units should be recognized if the taxes are both measurable and available for expenditure. Measurability in this case is based on an estimate of the sales taxes to be received, and availability is based on the ability of the governing entity that will receive the future distribution to obtain current resources through credit by using future sales tax receipts as collateral for the loan.
Q17-7 Budgetary accounting is the entering of the budgeted revenue, appropriations, and net increase or decrease in fund balance into the formal accounting records as a formal accounting control mechanism. Expected revenue is accounted for as estimated revenue, an anticipatory asset account. The governmental unit anticipates receiving resources from the revenue sources listed in the budget. Anticipated expenditures are accounted for as appropriations, an anticipatory liability account. The governmental unit anticipates incurring liabilities for the budgeted amount. Both the expected revenue and the appropriations accounts are closed at the end of the fiscal period.
Q17-8All expenditures are not encumbered. Payroll costs and other costs for goods received from within the governmental entity are not encumbered because these are normal and recurring costs.
Q17-9Some governmental units do not report small amounts of inventories of supplies in their balance sheets because the amount of inventory is not material.
Q17-10 Under the lapsing method the Reserve for Encumbrances account is shown as a reservation of the fund balance on the fiscal year-end balance sheet. The encumbrance account is a nominal account that is closed at the end of the fiscal period. The net effect is to close out the remaining encumbrances against the unreserved fund balance. Alternatively, the GASB does allow for just footnote disclosure of the lapsing open orders at year-end that are expected to be honored in the next fiscal period.
Under the nonlapsing method the expenditure authority from prior periods is carried over as nonlapsing encumbrances. The budget for the next fiscal period does not show these carryovers and is more realistic for situations in which orders placed with outside vendors cannot easily be canceled. The encumbrance account is still closed at the end of the period and the reserve for encumbrances is canceled.
When accounting for the actual expenditure in the subsequent year, the lapsing method requires the new governing board to decide if it will honor the outstanding encumbrances for the previous year by including them in the current budgeted appropriations. If the governing board accepts the obligation to honor their outstanding purchase order by including the expenditure within its budget, the entries made at the end of the previous year are reversed to re-establish the expenditure authority and the normal encumbrance/expenditure entries are made. In the event the new governing board decides not to honor the outstanding encumbrances, the reserve for
outstanding encumbrances is eliminated and the order for the goods is canceled with the external vendor.
When accounting for the actual expenditure in the subsequent year, the nonlapsing method separates expenditures made from spending authority carried over from prior periods. This is done in a reclassification entry made on the first day of the next fiscal period, which dates the reserve for encumbrances. There is no entry to reverse the encumbrance because the encumbrance account was closed in the previous period and no longer exists for this expenditure.
Q17-11The expenditure for inventories is recognized in the period the supplies are acquired under the purchase method. Under the consumption method, the expenditure for inventories is recognized for only the amount of inventory used in the period.
Q17-12 Interfund services provided and used are interfund activities that would be treated as revenues or expenditures if they were made with parties external to the governmental entity. An example would be if the general fund purchased supplies from the internal service
Interfund transfers out or in are transfers of resources between funds. An example would be a transfer of resources from the general fund (an interfund transfer out) to the capital projects fund (a transfer in) to assist in the construction costs of a new municipal building.
Q17-13An interfund transfer is reported as "Other Financing Sources or Uses" in the general fund's statement of revenue, expenditures, and changes in fund balance.
Q17-14The loan of $2,000 from the general fund to the enterprise fund is reported on the financial statements of the general fund on the balance sheet as a receivable. The loan is not shown on the fund's statement of revenue, expenditures, and changes in fund balance.
Q17-15Governmental accounting places many controls over expenditures, and much of the financial reporting focuses on the various aspects of an expenditure. An expenditure can be made for a function of the governmental entity or an activity within a function. Expenditures for an activity can be classified by object, which is the type of expenditure. The extensive detail required to account for and cross reference an expenditure to ensure it is properly classified at all levels requires a very comprehensive accounting system.
SOLUTIONS TO CASES
C17-1 Budget Theorya.A governmental accounting system must make it possible to:
1.Present fairly and with full disclosure, in conformity with generally accepted accounting principles, the financial position and results of financial operations of the funds and account groups of the governmental unit.
2.Determine and demonstrate compliance with finance-related legal and contractual provisions.
Because the legislative body enacts the budget into law, the budget is recorded in the accounts of a governmental unit. This enables a governmental unit to show legal compliance with the budget by providing an accounting system that measures actual expenditures and obligations against amounts appropriated, and actual revenue against estimated revenue. Appropriations enacted into law constitute maximum expenditure authorizations during the fiscal year, and they cannot legally be exceeded unless subsequently amended by the legislative body.
b.As the new fiscal year begins, the budget, already enacted into law by the legislative body, is recorded. Budgetary accounts are set up to record the estimated revenue and appropriations in the fund accounts by debiting estimated revenue and crediting appropriations. If there is a difference between estimated revenue and appropriations, the excess or deficit is credited or debited, respectively, to fund balance. In addition, subsidiary ledger accounts are maintained for estimated revenue by source and for appropriation/expenditure items.
At the end of the fiscal year, the estimated revenue balance and the appropriations balance are closed out to fund balance.
C17-2 Municipal versus Financial Accountinga.The most significant difference in purpose between municipal accounting and commercial accounting is that commercial enterprises are operated for profit, which places much emphasis on the proper determination of periodic earnings. Governmental units are primarily concerned with providing services to their citizens at minimum cost and reporting on the stewardship of public officials with respect to public funds, which places much emphasis on budgetary controls. However, some municipal units perform commercial services that are generally secondary to their tax-financed primary services.
Another difference in accounting purpose is that municipal accounting operations are controlled by legal provisions in constitutions, charters, and regulations having the force and effect of law. Because of these legal provisions and the diversity of its governmental operations, a municipality cannot use a single, unified set of accounts for recording and summarizing all financial transactions. If there is a conflict between legal provisions and generally accepted accounting principles applicable to governmental units, legal provisions should take precedence to the extent that the accounting system must enable the ready disclosure of compliance. However, for financial reporting purposes, generally accepted accounting principles must take precedence. Commercial enterprises usually are not controlled by charters that are restrictive; therefore, their accounting systems are designed differently.
Legislative action may limit the use of certain tax revenue for expenditure on particular programs, the methods of tax collection, or the rates of tax assessment. Such provisions must be reflected in the accounting system and be appropriately disclosed in the municipality's financial statements as a report on the stewardship of public officials with respect to public funds.
In governmental accounting all required accounts are organized on the basis of funds, each of which is independent of the other. Each fund must be so accounted for that the identity of its resources, obligations, revenue, expenditures, and fund balance is continually maintained. These purposes are accomplished by providing a complete self-balancing set of accounts for each fund.
The basis of accounting for the reporting on governmental units is often different from that used by commercial enterprises. For example, the accrual basis of accounting is recommended for all funds except the general, special revenue, debt service, capital projects, agency, and expendable trust funds. These funds should be accounted for by the modified accrual basis. The modified accrual basis is recommended for these funds because some of their revenue sources are difficult to measure in advance and frequently become available only a short time before cash receipt.
C17-2 (continued)
Generally, fair presentation of financial position and results of operations in conformity with generally accepted accounting principles requires that the financial statements of expendable funds (those that use the modified accrual basis) include a balance sheet and a statement of revenue, expenditures, and changes in fund balance. In contrast, however, a commercial enterprise would usually prepare a statement of financial position, an earnings statement, a statement of retained earnings, and a statement of cash flows. The statement of revenue and expenditures of the general fund and certain special revenue funds should include a comparison with a formal budget in order to conform with generally accepted accounting principles; there is no such requirement for a commercial enterprise.
b.Inventories are often ignored in governmental accounting because of an emphasis on budgeting revenue against outlays without looking behind the outlays to determine the extent to which they represent actual usage or consumption. Put another way, there is an emphasis on the cash or fiscal aspects rather than the operational aspects. This is easy to understand when one considers that general-fund expenditures for firemen's salaries and for the purchase of a new fire truck are accounted for in the same way.
However, inventories are not wholly ignored in governmental accounting. In those funds in which accounting parallels commercial accounting practice, such as enterprise funds, inventories are taken into consideration. Similarly, in an internal service fund concerned with rendering service involving the consumption of supplies or the delivery of stores to other funds and activities, the inventories of supplies or stores are taken into consideration in computing billings to departments serviced.
Inventories can and should be taken into consideration when preparing budgets. A fund, such as a general fund, having departments that possess large inventories at year-end obviously has need for smaller appropriations for the coming year than it would if those departments had zero inventories.
SOLUTIONS TO EXERCISESE17-1 Multiple-Choice Questions on the General Fund [AICPA Adapted] 1. b
2. a
3. b
4. b
5. c
6. b
E17-2 Matching for General Fund Transactions [AICPA Adapted] 1. K
2. C
3. B
4. B
5. K
6. A
7. H
8. I
9. M
10. F
11. B
12. B
E17-3 Multiple-Choice Questions on Budgets, Expenditures, and Revenue [AICPA Adapted] 1. c
2. d
3. c
4. a
5. b
6. c
7. d
8. b
9. c
10. dE17-4 Multiple-Choice Questions on the General Fund 1. b
2. d
3. cThe balance in the ENCUMBRANCES CONTROL and the FUND BALANCE RESERVED FOR ENCUMBRANCES accounts is the same. Therefore, an excess of one account over the other indicates a recording error.
4. cThe following entry is made when a purchase order is approved:
ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE RESERVED FOR ENCUMBRANCES
5. bThe 60-day rule for property tax revenues requires that property taxes collected within 60 days after the end of the year are revenues of the preceding fiscal year. The entry to record the tax levy would be:
Property Taxes Receivable - Current 700,000
Allowance for Uncollectible Taxes
10,000
Revenue - Property Taxes 600,000
Deferred Revenue (reported as a liability
on the general fund balance sheet) 90,000
E17-4 (continued)
6. aUpon receipt of the order, Oak would record the following entries:
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 5,000
ENCUMBRANCES CONTROL 5,000
Expenditures Control 4,950
Vouchers Payable 4,950
7. aJohnson would record the following entry:
ESTIMATED REVENUES CONTROL 9,000,000
ESTIMATED OTHER FINANCING SOURCE -
TRANSFER IN (Internal Service) 1,000,000
ESTIMATED OTHER FINANCING SOURCE -
TRANSFER IN (Debt Service) 500,000
APPROPRIATIONS CONTROL XXXXXX
BUDGETARY FUND BALANCE UNRESERVED XXX
8. c
9. a
10. b
E17-5 Encumbrances at Year-Enda. Outstanding encumbrances lapse at year-end.
(1)Year-end entries:
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 12,500
ENCUMBRANCES 12,500
Close remaining budgeted encumbrances.
Unreserved Fund Balance 12,500
Fund Balance Reserved for
Encumbrances 12,500
Reserve actual fund balance for
outstanding encumbrances at year-end.
(2)City Council accepts outstanding encumbrances:
Fund Balance Reserved for Encumbrances 12,500
Unreserved Fund Balance 12,500
Reverse prior-year encumbrance reserve.
ENCUMBRANCES 12,500
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 12,500
Establish budgetary control over
encumbrances renewed from prior year.
(3) Equipment received:
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 12,500
ENCUMBRANCES 12,500
Remove budgetary reserve for goods
received.
Expenditures 12,750
Vouchers Payable 12,750
Record expenditure for goods received
at actual cost of $12,750.
E17-5 (continued)
b. Outstanding encumbrances are nonlapsing.
(1) Year-end entries:
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 12,500
ENCUMBRANCES 12,500
Close remaining budgetary encumbrances.
Unreserved Fund Balance 12,500
Fund Balance Reserved for
Encumbrances 12,500
Reserve fund balance for outstanding
encumbrances.
(2) Date the encumbrances:
Fund Balance Reserved for
Encumbrances 12,500
Fund Balance Reserved for
Encumbrances - 20X1 12,500
Reclassify reserve from prior year.
(3) Equipment received:
Expenditures - 20X1 12,500
Expenditures - 20X2 250
Vouchers Payable 12,750
Record actual expenditure for goods
received.
(4) Closing entry:
Fund Balance Reserved for
Encumbrances - 20X1 12,500
Expenditures - 20X1 12,500
Close expenditures account for
prior year encumbrances.
Unreserved Fund Balance 250
Expenditures 250
Close expenditures for current year.
(Note: In entry (3), the excess of actual cost over the encumbered amount must be approved as part of 20X2's expenditures. Entry (3) records a debit to Expenditures - 20X2 which increases 20X2's expenditures. The expenditures for 20X2 are closed in a separate entry. If the actual cost was less than the encumbered amount, then the difference should be closed to Unreserved Fund Balance, although some governmental units have a policy of closing any difference between actual and encumbered amounts for prior year encumbrances to the current year's expenditures.)
E17-6 Accounting for Inventories of Office Suppliesa. Consumption method of accounting for inventories:
(1) Purchase of supplies:
August 8, 20X2
Expenditures 3,600
Vouchers Payable 3,600
Acquire inventory of supplies.
(2) Entries at end of 20X2 fiscal year:
September 30, 20X2
Inventory of Supplies 2,800
Expenditures 2,800
Recognize ending inventory of supplies.
Unreserved Fund Balance 2,800
Fund Balance Reserved for Inventories 2,800
Establish fund reserve for ending
inventory.
Unreserved Fund Balance 800
Expenditures 800
Close expenditures account.
(3) Entries at end of 20X3 fiscal year:
September 30, 20X3
Expenditures 2,800
Inventory of Supplies 2,800
Record expenditures for
inventories consumed.
Fund Balance Reserved for Inventories 2,800
Unreserved Fund Balance 2,800
Remove fund balance reserve
for inventories consumed.
Unreserved Fund Balance 2,800
Expenditures 2,800
Close expenditures account.
E17-6 (continued)
b. Purchase method of accounting for inventories:
(1) Purchase of supplies:
August 8, 20X2
Expenditures 3,600
Vouchers Payable 3,600
Acquire inventory of supplies.
(2) Entries at end of 20X2 fiscal year:
September 30, 20X2
Inventory of Supplies 2,800
Fund Balance Reserved for Inventories 2,800
Recognize ending inventory of supplies.
Unreserved Fund Balance 3,600
Expenditures 3,600
Close expenditures account.
(3) Entries at end of 20X3 fiscal year:
September 30, 20X3
Fund Balance Reserved for Inventories 2,800
Inventory of Supplies 2,800
Remove fund balance reserve
for inventories consumed.
E17-7 Accounting for Prepayments and Capital Assets1. Acquired three-year insurance policy:
September 1, 20X1
Expenditures 5,400
Vouchers Payable 5,400
Record acquisition of
three-year insurance policy.
2. New furniture for the city council meeting room:
September 17, 20X1
ENCUMBRANCES 15,600
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 15,600
Encumber for purchase orders for new furniture.
October 1, 20X1
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 15,600
ENCUMBRANCES 15,600
Reverse reserve for furniture received.
Expenditures 15,200
Vouchers Payable 15,200
Receive furniture at actual cost.
3. Acquired supplies - consumption method used:
November 4, 20X1
Expenditures 1,800
Vouchers Payable 1,800
Acquire supplies.
Closing entries:
December 31, 20X1
Inventory of Supplies 1,120
Expenditures 1,120
Recognize ending inventory of supplies.
Unreserved Fund Balance 1,120
Fund Balance Reserved for
Inventories 1,120
Establish fund reserve for ending inventory.
Unreserved Fund Balance 21,280
Expenditures
21,280
Close expenditures account:
$ 5,400 Insurance Policy
15,200 Furniture
680 Supplies
$21,280 Total
E17-8 Computation of Revenues Reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balance for the General Fund
Gilbert City
Revenue Reported by the General Fund
For the Year Ended June 30, 20X8
Property tax revenue $1,860,000
Interest revenue on advance 1,500
Grant revenue used to acquire computer equipment 235,000
Sales tax revenue 125,000
Liquor license revenue 66,000Total revenue reported $2,287,500Notes:
(1)The amount reported for property tax revenue, $1,860,000 is computed in the following way:
Levy $2,000,000
Less:
The allowance for uncollectible taxes($2,000,000 X .02) (40,000)
Property taxes expected to be collected after August 31,
20X8 - the 60 day rule for property tax collections -
report as deferred revenue at June 30, 20X8 (100,000)
Property tax revenue for year ended June 30, 20X8 $1,860,000(2)The receipt of $50,000 for the repayment of the advance is recorded in the following manner by the general fund:
Cash 51,500
Advance to Internal Service Fund
50,000
Interest revenue 1,500
(3)Collection of property taxes during the year ended June 30, 20X8, does not affect the recognition of revenue. The revenue was recognized at the levy date, not the collection date.
(4)Revenue recognition related to the State grant is based upon spending the grant to acquire computer equipment. Therefore, revenue from the State grant is $235,000, the amount of the grant expended.
(5)Revenue from the sales tax is the amount collected during the year ended June 30, 20X8, or $125,000. The additional sales taxes of $25,000 will be revenue of the next fiscal year when the taxes are received from the State and are available to pay for expenditures incurred in the next fiscal year.
(6)The borrowing of the $800,000 using the property tax levy as collateral represents a liability in the general fund. This amount is not revenue.
(7)The $30,000 received from a terminated debt service fund is reported
as an other financing source - transfer in, not revenue.
(8)The revenue from liquor licenses is the amount collected, not the amount expected to be collected. Therefore, revenue of $66,000 is recognized from the sale of liquor licenses for the year ended June 30, 20X8.E17-8 (continued)
(9)The $15,000 reimbursement is not reported as revenue in the general fund. Reimbursements are recorded as reductions in expenditures.
(10)The collection of the delinquent property taxes is not reported as revenue by the general fund for the year ended June 30, 20X8. The revenue associated with the delinquent property taxes was reported in the preceding fiscal year, because the property taxes were expected to be collected within 60 days of the end of the fiscal year.
E17-9Computation of Expenditures Reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balance for the General Fund
Benson City
Amount Reported for Expenditures by the General Fund
For the Year Ended June 30, 20X8
Computer equipment acquisitions in September, 20X7 $ 202,000
Reimbursement to special revenue fund in May, 20X8 15,000
Use of city water during the fiscal year 12,000
Supplies acquisitions 35,000
Salaries and wages of general fund employees 900,000
Interest paid on loan from local bank 15,000
Employers pension contribution to pension trust 95,000
Lease payments 10,000 Total amount reported for expenditures $1,284,000Notes:
(1)The $150,000 transfer to the capital projects fund in March, 20X8, is reported as an other financing use - transfer out. Therefore, it should not be included in the amount reported for expenditures for the year ended June 30, 20X8.
(2)The amount paid for the computer equipment is the amount reported for expenditures. Therefore, $202,000 is included in expenditures for equipment, not the estimated amount of $200,000 that was recorded for the order(encumbrances).
(3)None of the $500,000 transferred to the internal service fund should be reported as expenditures. The $200,000 that must be repaid by the internal service fund should be accounted for as an advance (a receivable in the general fund), while the $300,000 that represented a permanent contribution should be accounted for as an other financing use - transfer out.
(4)The $15,000 reimbursement to the special revenue fund should be included in the expenditures of the general fund for the year ended June 30, 20X8.
E17-9 (continued)
(5)The $12,000 of billings from the water department should be accounted for as expenditures by the general fund. Billings for water usage constitute an interfund services provided and used transaction. Note that the amount paid by the general fund, $11,500, is not the correct amount of the expenditures. The correct amount is $12,000.
(6)The acquisition of supplies and the payment of salaries and wages by the general fund should be accounted for as expenditures. The entire cost of the supplies purchased should be reported as expenditures because the general fund uses the purchase method of accounting for supplies.
(7)The outstanding encumbrances at June 30, 20X8, are not included in expenditures. The outstanding encumbrances will be reported on the general fund balance sheet as a reservation of fund equity.
(8)The repayment of the principal of the bank loan is not an expenditure. However, the amount paid for interest, $15,000, should be included in expenditures for the year ended June 30, 20X8.
(9)The general funds $95,000 contribution to the citys pension trust should be included in expenditures of the general fund for the year ended June 30, 20X8. The employers contribution to a pension trust is an example of an interfund services provided or used transaction.
(10) The general funds lease payments should be included in the amount reported for expenditures for the year ended June 30, 20X8.
E17-10Closing Entries and Balance Sheet
a. Closing entries for the general fund:
(1) APPROPRIATIONS CONTROL 1,145,000
ESTIMATED OTHER FINANCING
USE - TRANSFER OUT 25,000
BUDGETARY FUND BALANCE UNRESERVED 30,000
ESTIMATED REVENUES CONTROL
1,200,000
Close budgetary accounts.
(2) BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 32,000
ENCUMBRANCES 32,000
Close remaining encumbrances by
reversing remaining budgetary balance.
(3) Unreserved Fund Balance 32,000
Fund Balance Reserved for
Encumbrances 32,000
Reserve fund balance for encumbrances
that lapse, but are expected to be
honored in 20X2.
(4) Property Tax Revenue
1,130,000
Miscellaneous Revenue 40,000
Expenditures 1,140,000
Unreserved Fund Balance 30,000
Close operating statement accounts.
(5) Unreserved Fund Balance 25,000
Other Financing Use - Transfer Out 25,000
Close transfer out.
E17-10 (continued)
b. General fund balance sheet:
Lone Wolf
General Fund
Balance Sheet
December 31, 20X1
Assets
Cash
$ 90,000
Property Taxes Receivable - Delinquent $100,000
Less: Allowance for Uncollectibles - Delinquent (7,200) 92,800
Due from Other Funds 14,600Total Assets $ 197,400 Liabilities and Fund Balance
Vouchers Payable $ 65,000
Due to Other Funds 8,400
Fund Balance:
Reserved for Encumbrances $32,000
Unreserved 92,000 124,000Total Liabilities and Fund Balance $ 197,400E17-11Statement of Revenues, Expenditures, and Changes in Fund Balance Lone Wolf
General Fund
Statement of Revenues, Expenditures, and Changes
in Fund Balance
For the Fiscal Year Ended December 31, 20X1
Revenue:
Property Taxes
$1,130,000
Miscellaneous
40,000 $1,170,000
Expenditures
1,140,000 Excess of Revenue over Expenditures $ 30,000
Other Financing Sources (Uses):
Transfer Out
(25,000)
Net Change in Fund Balance $ 5,000
Fund Balance, January 1, 20X1 119,000 Fund Balance, December 31, 20X1 $ 124,000
E17-12 Matching Questions Involving Interfund Activities in the General
Fund 1. B
2. C
3. C
4. C
5. C
6. B
7. A
8. D
9. A
10. B
SOLUTIONS TO PROBLEMSP17-13 General Fund Entries [AICPA Adapted] (1) ESTIMATED REVENUES CONTROL 2,000,000
APPROPRIATIONS CONTROL 1,940,000
BUDGETARY FUND BALANCE UNRESERVED 60,000
Record the budget.
(2) Taxes Receivable 1,870,000
Allowance for Uncollectible Taxes 10,000
Property Tax Revenue 1,860,000
Record the property tax levy.
(3) Allowance for Uncollectible Taxes 8,000
Taxes Receivable 8,000
Write off uncollectible
taxes receivable.
(4) Cash 1,820,000
Taxes Receivable 1,820,000
Record property tax collections.
(5) ENCUMBRANCES 1,070,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 1,070,000
Record purchase commitments.
(6) BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 1,000,000
ENCUMBRANCES 1,000,000
Reverse for purchase orders received.
(7) Expenditures 1,840,000
Vouchers Payable 1,840,000
Record actual expenditures.
(8) Vouchers Payable 1,852,000
Cash 1,852,000
Record payment of vouchers
during period.
(9) APPROPRIATIONS CONTROL 1,940,000
BUDGETARY FUND BALANCE UNRESERVED 60,000
ESTIMATED REVENUES CONTROL 2,000,000
Close budgetary accounts.
(10) BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 70,000
ENCUMBRANCES 70,000
Close remaining encumbrances by
reversing remaining budgetary balance.
P17-13 (continued)
(11) Unreserved Fund Balance 70,000
Fund Balance Reserved for
Encumbrances 70,000
Reserve fund balance for outstanding
purchase commitments.
(12) Property Tax Revenue 1,860,000
Expenditures 1,840,000
Unreserved Fund Balance 20,000
Close operating statement accounts.
P17-14 General Fund Entries 1. Entry to record operating budget for general fund:
ESTIMATED REVENUES CONTROL 925,000
ESTIMATED OTHER FINANCING SOURCE -
TRANSFER IN 75,000
APPROPRIATIONS CONTROL 960,000
ESTIMATED OTHER FINANCING USE -
TRANSFER OUT 25,000
BUDGETARY FUND BALANCE UNRESERVED 15,000
2. Entries to record lapsed encumbrances from the preceding
year which were included in current appropriations:
Fund Balance Reserved for Encumbrances 18,000
Unreserved Fund Balance 18,000
ENCUMBRANCES CONTROL 18,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 18,000
3. Entry to record property tax levy:
Property Taxes Receivable - Current 816,000
Allowance for Uncollectible
Taxes - Current
16,000
Revenue - Property Tax 800,000
P17-14 (Continued)
4. Entry to record receipt of cash from property tax collections:
Cash 805,000
Property Taxes Receivable - Current 805,000
Entry to record adjustment to the allowance account:
Allowance for Uncollectible Taxes
- Current 10,000
Revenue - Property Tax 10,000
Entry to record reclassification of property taxes receivable:
Property Taxes Receivable - Delinquent 11,000
Allowance for Uncollectible Taxes Current 6,000
Allowance for Uncollectible
Taxes - Delinquent
6,000
Property Taxes Receivable - Current 11,000
5. Entry to record receipt of sales taxes and other revenue:
Cash 126,000
Revenue - Sales Tax 102,000
Revenue - Licenses and Permits 24,000
6. Entry to record interfund receivable for transfer in:
Due from Special Revenue Fund 70,000
Other Financing Source - Transfer
In from Special Revenue Fund 70,000
Entry to record cash transferred:
Cash 70,000
Due from Special Revenue Fund
70,000
Entry to record interfund payable for transfer out:
Other Financing Use - Transfer
Out to Internal Service Fund 25,000
Due to Internal Service Fund 25,000
Entry to record cash transferred:
Due to Internal Service Fund 25,000
Cash
25,000
P17-14 (Continued)
7. Entry to record equipment ordered:
ENCUMBRANCES CONTROL 50,000
BUDGETARY FUND BALANCE
RESERVED FOR ENCUMBRANCES 50,000
Entries to record equipment received and vouchers paid:
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 50,000
ENCUMBRANCES CONTROL 50,000
Expenditures 50,500
Vouchers Payable 50,500
Vouchers Payable 50,500
Cash 50,500
8. Entry to record loan on January 1, 20X6:
Due from Enterprise Fund 20,000
Cash 20,000
Entry to record receipt of loan and interest on June 30, 20X6:
Cash 20,600
Revenue - Interest 600
Due from Enterprise Fund 20,000
Interest = $20,000 x .06 x 1/2 = $600
9. Entry to record billing:
Expenditures 500
Due to Internal Service Fund 500
Entry to record payment:
Due to Internal Service Fund 500
Cash 500
P17-15 General Fund Entries [AICPA Adapted]
1. ESTIMATED REVENUES CONTROL 3,000,000
APPROPRIATIONS CONTROL
2,980,000
BUDGETARY FUND BALANCE UNRESERVED 20,000
Record the budget.
Taxes Receivable 2,870,000
Allowance for Uncollectible Taxes 70,000
Revenue from Taxes
2,800,000
Record tax levy.
Cash 2,810,000
Taxes Receivable
2,810,000
Record tax collection.
Allowance for Uncollectible Taxes 40,000
Taxes Receivable 40,000
Record write-off of uncollectible taxes:
July 1, 20X1, taxes receivable balance $ 150,000
20X2 tax levy 2,870,000
Less: Taxes collected (2,810,000)
Taxes receivable final balance (170,000)
Taxes written off as uncollectible $ 40,000 Cash 130,000
Miscellaneous Revenue
130,000
Collect miscellaneous revenue.
2. Fund Balance Reserved for Encumbrances 60,000
Unreserved Fund Balance
60,000
Reverse prior reserve which has
been renewed.
ENCUMBRANCES 60,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 60,000
Renew encumbrances from prior period.
ENCUMBRANCES 2,700,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 2,700,000
Record encumbrances.
P17-15 (Continued)
3. Expenditures 142,000
Due to Other Funds 142,000
Record liability to other funds
for services received.
4. BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 2,700,000
ENCUMBRANCES 2,700,000
Reverse encumbrances for items
received.
Expenditures 2,700,000
Vouchers Payable
2,700,000
Record expenditures.
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES
60,000
ENCUMBRANCES 60,000
Reverse reserve for encumbrances.
Expenditures (Prior Period)
58,000
Vouchers Payable 58,000
Actual expenditure for goods
received.
Due to Other Funds 210,000
Vouchers Payable 210,000
Record approval for payment to
other funds.
Vouchers Payable
2,640,000
Cash 2,640,000
Record voucher payments.
5. ENCUMBRANCES 91,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 91,000
Record May 10 encumbrance.
P17-16 General Fund Closing Entries and Statementsa. Adjusting entries:
(1) Inventory of Supplies 8,000
Expenditures 8,000
Establish ending inventory of supplies.
(2) Unreserved Fund Balance 8,000
Fund Balance Reserved for
Inventories 8,000
Reserve fund balance for supplies
inventory.
Closing entries:
(1) APPROPRIATIONS CONTROL 1,400,000
ESTIMATED OTHER FINANCING
USE - TRANSFER OUT 50,000
ESTIMATED REVENUES CONTROL 1,450,000
Close budgetary accounts.
(2) BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 23,000
ENCUMBRANCES
23,000
Close remaining encumbrances.
(3) Unreserved Fund Balance 23,000
Fund Balance Reserved for
Encumbrances 23,000
Reserve fund balance for encumbrances
that lapse, but may be renewed.
(4) Property Tax Revenue 1,390,000
Grant Revenue 40,000
Miscellaneous Revenue 32,000
Expenditures
1,377,000
Other Financing Use - Transfer Out 50,000
Unreserved Fund Balance 35,000
Close operating statement accounts.
P17-16 (continued)
b. Quincy
General Fund
Balance Sheet
June 30, 20X2
Assets
Cash $ 100,000
Property Taxes Receivable - Delinquent $ 108,000
Less: Allowance for Uncollectibles - Delinquent (8,400)
99,600
Due from Data Processing Fund 10,000
Inventory of Supplies 8,000Total Assets $ 217,600 Liabilities and Fund Balance
Vouchers Payable $ 44,000
Due to Printing Service Fund 2,600
Fund Balance:
Reserved for Inventories $ 8,000
Reserved for Encumbrances 23,000
Unreserved Fund Balance 140,000 171,000Total Liabilities and Fund Balance $ 217,600c. Quincy
General Fund
Statement of Revenues, Expenditures, and Changes
in Fund Balance
For Fiscal Year Ended June 30, 20X2
Revenue:
Property Taxes $1,390,000
Grants 40,000
Miscellaneous 32,000 $1,462,000
Expenditures 1,377,000Excess of Revenue over Expenditures $ 85,000
Other Financing Sources (Uses):
Transfer Out (50,000)
Net Change in Fund Balance $ 35,000
Fund Balance, July 1, 20X1 136,000Fund Balance, June 30, 20X2 $ 171,000
P17-17 General Fund Entries and Statementsa. Budget and transaction entries for 20X2:
1. & 2.
ESTIMATED REVENUES CONTROL
1,420,500
APPROPRIATIONS CONTROL
1,356,000
ESTIMATED OTHER FINANCING
USE - TRANSFER OUT TO
INTERNAL SERVICE FUND 25,000
BUDGETARY FUND BALANCE UNRESERVED 39,500
Record budget.
Property Taxes Receivable - Current
1,300,000
Allowance for Uncollectibles - Current
19,500
Property Tax Revenue
1,280,500
Record levy.
Fund Balance Reserved for Encumbrances 18,000
Fund Balance Reserved for
Encumbrances - 20X1 18,000
Reclassify reserve for prior year.
3. Cash
1,314,000
Property Taxes Receivable - Current 1,245,000
Property Taxes Receivable - Delinquent 69,000
Record tax collections.
Cash 166,000
Grants Revenue 90,000
Miscellaneous Revenue 46,000
Other Financing Source - Transfer
In from Capital Projects Fund 30,000
Other cash receipts.
Allowance for Uncollectibles - Delinquent 8,000
Property Tax Revenue 3,000
Property Taxes Receivable - Delinquent 11,000
Write off remaining delinquent taxes
from 20X1.
Allowance for Uncollectibles - Current 12,000
Property Tax Revenue 12,000
Reduce current allowance to $7,500.
Property Taxes Receivable - Delinquent 55,000
Allowance for Uncollectibles - Current 7,500
Property Taxes Receivable - Current 55,000
Allowance for Uncollectibles - Delinquent 7,500
Remainder of unpaid 20X2 property taxes
reclassified as delinquent.
P17-17 (continued)
4. ENCUMBRANCES 1,336,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES
1,336,000
Issue purchase orders.
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES
1,216,000
ENCUMBRANCES
1,216,000
Receive ordered items:
$1,216,000 = $1,336,000 - $120,000 outstanding
Expenditures - 20X1 18,000
Expenditures - (20X2) 2,000
Vouchers payable 20,000
Actual cost for prior year's
encumbrance is $20,000. The approved
excess of $2,000 is charged to current
year's expenditures.
Expenditures - (20X2) 1,220,000
Vouchers Payable 1,209,000
Inventory of Supplies 11,000
Actual expenditures, including
beginning inventory of supplies:
$1,220,000 = $1,240,000 - $20,000 prior years
Fund Balance Reserved for Inventories 11,000
Unreserved Fund Balance
11,000
Eliminate present reserve for
inventories. (Will properly
re-establish in adjusting
entry process.)
Vouchers payable
1,227,000
Cash
1,227,000
Pay vouchers.
5.Other Financing Use Transfer
Out to Internal Service Fund
25,000
Due from Computer Center Fund
20,000
Cash
45,000
Other cash payments.
P17-17 (continued)
b. Ruby Valley
General Fund
Preadjusting Trial Balance
June 30, 20X2
Debit Credit Cash $ 311,000
Property Tax Receivable - Delinquent 55,000
Allowance for Uncollectibles - Delinquent $ 7,500
Due from Computer Center Fund 20,000
Inventory of Supplies -0-
Vouchers Payable 44,000
Fund Balance Reserved for Inventories -0-
Fund Balance Reserved for Encumbrances - 20X1 18,000
Unreserved Fund Balance 126,000
Property Tax Revenue 1,289,500
Grants Revenue 90,000
Miscellaneous Revenue 46,000
Other Financing Source - Transfer
In from Capital Projects Fund 30,000
Expenditures - 20X1 18,000
Expenditures 1,222,000
Other Financing Use - Transfer
Out to Internal Service Fund 25,000
ESTIMATED REVENUES CONTROL 1,420,500
APPROPRIATIONS CONTROL 1,356,000
ESTIMATED OTHER FINANCING USES -
TRANSFER OUT TO INTERNAL SERVICE FUND 25,000
ENCUMBRANCES 120,000
BUDGETARY FUND BALANCE RESERVED FOR ENCUMBRANCES 120,000
BUDGETARY FUND BALANCE UNRESERVED 39,500 $3,191,500 $3,191,500P17-17 (continued)
c. Adjusting entries:
(1) Inventory of Supplies 6,700
Expenditures 6,700
Establish ending supplies inventory.
(2) Unreserved Fund Balance 6,700
Fund Balance Reserved for
Inventories 6,700
Reserve for ending supplies inventory.
Closing entries:
(1) APPROPRIATIONS CONTROL 1,356,000
ESTIMATED OTHER FINANCING USE -
TRANSFER OUT TO INTERNAL SERVICE FUND 25,000
BUDGETARY FUND BALANCE UNRESERVED 39,500
ESTIMATED REVENUES CONTROL 1,420,500
Close budgetary accounts.
(2) BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 120,000
ENCUMBRANCES 120,000
Close remaining encumbrances.
(3) Unreserved Fund Balance 120,000
Fund Balance Reserved for
Encumbrances 120,000
Reserve fund balance for nonlapsing
encumbrances.
(4) Fund Balance Reserved for
Encumbrances - 20X1 18,000
Expenditures - 20X1 18,000
Close prior year's expenditures against
prior year's reserve. Excess of actual
cost of $20,000 over encumbrance of
$18,000 is charged to current year's
(20X2) expenditures.
(5) Property Tax Revenue 1,289,500
Grants Revenue 90,000
Miscellaneous Revenue 46,000
Expenditures 1,215,300
Unreserved Fund Balance 210,200
Close operating statement accounts.
P17-17 (continued)
(6) Other Financing Source - Transfer
In from Capital Projects Fund 30,000
Other Financing Use - Transfer
Out to Internal Service Fund 25,000
Unreserved Fund Balance 5,000
Close interfund transfers.
d. Ruby Valley
General Fund
Balance Sheet
June 30, 20X2
Assets
Cash $311,000
Property Taxes Receivable - Delinquent $55,000
Less: Allowance for
Uncollectibles - Delinquent (7,500) 47,500
Due from Computer Center Fund 20,000
Inventory of Supplies
6,700Total Assets $385,200 Liabilities and Fund Balance
Vouchers Payable $ 44,000
Fund Balance:
Reserved for Inventories $ 6,700
Reserved for Encumbrances 120,000
Unreserved Fund Balance 214,500 341,200Total Liabilities and Fund Balance $385,200P17-17 (continued)
e.
Ruby Valley
General Fund
Statement of Revenues, Expenditures, and Changes
in Fund Balance
For Fiscal Year Ended June 30, 20X2
Actual
Revenue:
Property Taxes $1,289,500
Grants 90,000
Miscellaneous 46,000Total Revenues $1,425,500Expenditures:
Chargeable to 20X2 Appropriations:
Current (Schedule A) $1,170,300
Capital Outlay 45,000
Total Expenditures of 20X2 Appropriations $1,215,300
Chargeable to 20X1 Appropriations:
Current (20X1 encumbrance) 18,000Total Expenditures $1,233,300Excess of Revenue over Expenditures $ 192,200
Other Financing Sources (Uses):
Transfer Out $ (25,000)
Transfer In 30,000 5,000Change in Fund Balance $ 197,200
Fund Balance, July 1, 20X1 144,000Fund Balance, June 30, 20X2 $ 341,200Schedule A:
Actual expenditures:
Preadjusting trial balance, expenditures $1,222,000
Inventory adjustment (6,700)
Capital expenditure
outlay for elevator (45,000)
Actual current operating expenditures $1,170,300
P17-18 General Fund Entries and Statementsa. Entries for 20X2 budget and transactions:
1. ESTIMATED REVENUES CONTROL 1,877,000
APPROPRIATIONS CONTROL 1,840,000
ESTIMATED OTHER FINANCIAL
USE - TRANSFER OUT 37,000
Record budget.
ENCUMBRANCES 21,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 21,000
Renew encumbrances from prior period.
Fund Balance Reserved for Encumbrances 21,000
Unreserved Fund Balance 21,000
Reverse reserve for renewed encumbrances.
Property Tax Receivable - Current 1,600,000
Allowance for Uncollectibles - Current 16,000
Property Tax Revenue 1,584,000
Record property tax levy.
2. Cash 1,590,000
Property Taxes Receivable - Current 1,507,000
Property Taxes Receivable - Delinquent 83,000
Collect property taxes.
Allowance for Uncollectibles - Delinquent 9,000
Property Taxes Receivable - Delinquent 7,000
Property Tax Revenue 2,000
Write off remaining delinquent property
taxes.
Property Taxes Receivable - Delinquent 93,000
Allowance for Uncollectibles - Current 16,000
Property Taxes Receivable - Current 93,000
Allowance for Uncollectibles - Delinquent 16,000
Reclassify remainder of uncollected
20X2 property taxes.
Cash 333,000
Sales Tax Revenue 284,000
Miscellaneous Revenue 39,000
Due to Motor Pool Fund 10,000
Other cash receipts.
P17-18 (continued)
3. ENCUMBRANCES 1,800,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 1,800,000
Record purchase orders.
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 1,773,000
ENCUMBRANCES 1,773,000
Reverse reserve for items received.
Expenditures 1,788,000
Vouchers Payable 1,788,000
Actual expenditures for items
received.
Vouchers Payable 1,793,000
Cash 1,793,000
Vouchers paid.
4. Due from Central Stores Fund 13,000
Other Financing Use - Transfer Out 37,000
Cash 50,000
Other cash payments and transfer.
P17-18 (continued)
b. Pine Ridge
General Fund
Preclosing Trial Balance
December 31, 20X2
Debit Credit Cash $ 191,000
Property Tax Receivable - Delinquent 93,000
Allowance for Uncollectibles - Delinquent $ 16,000
Due from Central Stores Fund 13,000
Vouchers Payable 26,000
Due to Motor Pool Fund 10,000
Unreserved Fund Balance 161,000
Property Tax Revenue 1,586,000
Sales Tax Revenue 284,000
Miscellaneous Revenue 39,000
Expenditures 1,788,000
Other Financing Use - Transfer Out 37,000
ESTIMATED REVENUES CONTROL 1,877,000
APPROPRIATIONS CONTROL 1,840,000
ESTIMATED OTHER FINANCING USE - TRANSFER OUT 37,000
ENCUMBRANCES 48,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 48,000 $4,047,000 $4,047,000P17-18 (continued)
c. Closing entries:
APPROPRIATIONS CONTROL 1,840,000
ESTIMATED OTHER FINANCING
USE - TRANSFER OUT 37,000
ESTIMATED REVENUES CONTROL 1,877,000
Close budgetary accounts.
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 48,000
ENCUMBRANCES 48,000
Close remaining encumbrances.
Unreserved Fund Balance 48,000
Fund Balance Reserved for
Encumbrances 48,000
Reserve fund balance for outstanding
purchase orders.
Property Tax Revenue 1,586,000
Sales Tax Revenue 284,000
Miscellaneous Revenue 39,000
Expenditures 1,788,000
Other Financing Use - Transfer Out 37,000
Unreserved Fund Balance 84,000
Close operating statement accounts.
d. Pine Ridge
General Fund
Balance Sheet
December 31, 20X2
Assets
Cash $ 191,000
Property Tax Receivables - Delinquent $ 93,000
Less: Allowance for Uncollectibles - Delinquent (16,000) 77,000
Due from Central Stores Fund 13,000Total Assets $281,000 Liabilities and Fund Balance
Vouchers Payable $ 26,000
Due to Motor Pool Fund 10,000
Fund Balance:
Reserved for Encumbrances $ 48,000
Unreserved Fund Balance 197,000 245,000Total Liabilities and Fund Balance $281,000
P17-18 (continued)
e. Pine Ridge
General Fund
Statement of Revenues, Expenditures, and Changes
in Fund Balance
For Fiscal Year Ended December 31, 20X2 Revenue:
Property Taxes $1,586,000
Sales Taxes 284,000
Miscellaneous 39,000 Total Revenue $1,909,000 Expenditures:
Current $1,746,000
Capital Outlay 42,000 Total Expenditures $1,788,000 Excess of Revenue over Expenditures $ 121,000
Other Financing Sources (Uses):
Transfer Out (37,000)
Change in Fund Balance $ 84,000
Fund Balance, January 1, 20X2 161,000 Fund Balance, December 31, 20X2 $ 245,000P17-19 General Fund Entries ESTIMATED REVENUE - PROPERTY TAXES 4,500,000
ESTIMATED REVENUE - LICENSES AND PERMITS 300,000
ESTIMATED REVENUE - FINES 200,000
APPROPRIATIONS - GENERAL GOVERNMENT 1,500,000
APPROPRIATIONS - POLICE SERVICES 1,200,000
APPROPRIATIONS - FIRE DEPARTMENT SERVICES 900,000
APPROPRIATIONS - PUBLIC WORKS SERVICES 800,000
APPROPRIATIONS - FIRE ENGINES 400,000
BUDGETARY FUND BALANCE UNRESERVED 200,000
Record the budget.
1. Property Taxes Receivable - Current 4,650,000
Allowance for
Uncollectibles - Current 150,000
Property Tax Revenue 4,500,000
Record property tax levy.
2. Cash 3,900,000
Property Taxes Receivable 3,900,000
Record collection of taxes.
Property Taxes Receivable - Delinquent 750,000
Allowance for Uncollectibles - Current 150,000
Property Taxes Receivable - Current 750,000
Allowance for
Uncollectibles - Delinquent 150,000
Record reclassification of taxes.
3. Cash 300,000
Notes Payable 300,000
Record issue of tax anticipation notes.
4. Cash 485,000
Revenue - Licenses and Permits 270,000
Revenue - Fines 200,000
Revenue - Sale of Fixed Assets 15,000
Record other cash collections.
P17-19 (continued)
5. ENCUMBRANCES - GENERAL GOVERNMENT 1,050,000
ENCUMBRANCES - POLICE SERVICES 300,000
ENCUMBRANCES - FIRE DEPARTMENT SERVICES 150,000
ENCUMBRANCES - PUBLIC WORK SERVICES 250,000
ENCUMBRANCES - FIRE ENGINES 400,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 2,150,000
Record encumbrances issued.
BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES 2,035,000
ENCUMBRANCES - GENERAL GOVERNMENT 990,000
ENCUMBRANCES - POLICE SERVICES 270,000
ENCUMBRANCES - FIRE DEPARTMENT SERVICES 135,000
ENCUMBRANCES - PUBLIC WORK SERVICES 240,000
ENCUMBRANCES - FIRE ENGINES 400,000
Remove encumbrances for orders received.
6. Expenditures - General Government 1,440,000
Expenditures - Police Services 1,155,000
Expenditures - Fire Department Services 870,000
Expenditures - Public Work Services 700,000
Expenditures - Fire Engines 400,000
Vouchers Payable 4,565,000
Recognize expenditures for orders received.
7. Vouchers Payable 4,600,000
Cash 4,600,000
Pay approved vouchers.
P17-20 General Fund Entries [AICPA Adapted] 1. Budget adopted:
ESTIMATED REVENUE - TAXES 220,000
ESTIMATED REVENUE - FINES, FORFEITS,
AND PENALTIES 80,000
ESTIMATED REVENUE - MISCELLANEOUS 100,000
ESTIMATED OTHER FINANCING SOURCES -
PROCEEDS OF BOND ISSUE 200,000
APPROPRIATIONS - PROGRAM OPERATIONS 360,000
APPROPRIATIONS - GENERAL ADMINISTRATION 120,000
APPROPRIATIONS - CAPITAL OUTLAYS 80,000
ESTIMATED OTHER FINANCING USE - TRANSFER
OUT TO CAPITAL PROJECTS FUND 20,000
BUDGETARY FUND BALANCE UNRESERVED 20,000
Record budget.
Fund Balance Reserved for Encumbrances 12,000
Fund Balance Reserved for
Encumbrances - 20X2 12,000
Reclassify reserve from prior year.
2. Taxes Receivable - Current 230,000
Allowance for Uncollectible
Taxes - Current 9,200
Revenue - Taxes 220,800
Record tax levy:
$230,000 = ($220,800/.96)
3. ENCUMBRANCES 316,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 316,000
Record encumbrance for ordered goods.
4. Unreserved Fund Balance 20,000
Fund Balance Designated for
Capital Outlays 20,000
Designation of fund balance.
5. Cash 664,000
Taxes Receivable - Delinquent 38,000
Taxes Receivable - Current 226,000
Expenditures - Capital Outlay 4,000
Revenue - Fines, Forfeits, and Penalties 88,000
Revenue - Miscellaneous 90,000
Other Financing Source - Proceeds of
Bond Issue 200,000
Other Financing Source - Transfer
In from Discontinued Fund 18,000
Record cash collections and transfers.
P17-20 (continued)
6. Allowance for Uncollectible Accounts Current 6,200
Revenue - Taxes 6,200
Adjust current allowance account.
Allowance for Uncollectible
Accounts - Delinquent 8,000
Taxes Receivable - Delinquent 8,000
Write off remaining delinquent
taxes receivable
7. BUDGETARY FUND BALANCE RESERVED FOR
ENCUMBRANCES
290,000
ENCUMBRANCES
290,000
Reverse budgetary encumbrance for orders
received: ($302,000 - $12,000)
Expenditures - 20X2 - Program Operations 12,000
Expenditures - Program Operations 154,000
Expenditures - General Administration 80,000
Expenditures - Capital Outlay 62,000
Vouchers Payable
308,000
Record expenditures for orders received.
8. Expenditures - Program Operations 188,000
Expenditures - General Administration 38,000
Expenditures - Capital Outlay 18,000
Other Financing Use - Transfer
Out to Capital Projects Fund 20,000
Vouchers Payable
244,000
Due to Capital Projects Fund 20,000
Record additional vouchers.
9. Taxes Receivable - Current 2,000
Deferred Revenue - Taxes 2,000
Record credit for overpayment.
10. Vouchers Payable 580,000
Cash
580,000
Pay approved vouchers.
11. Fund Balance Reserved for Stores
Inventory 6,000
Stores Inventory - Program Operations 6,000
Record reduction in stores inventory.
P17-21 General Fund Entries and Balance Sheet
a.
1. ESTIMATED REVENUES CONTROL
290,000
ESTIMATED OTHER FINANCING
SOURCE - TRANSFER IN 20,000
APPROPRIATIONS CONTROL 285,000
ESTIMATED OTHER FINANCING
USE - TRANSFER OUT 15,000
BUDGETARY FUND BALANCE UNRESERVED 10,000
Record the operating budget
for fiscal 20X6.
2. Fund Balance Reserved for Encumbrances 16,000
Unreserved Fund Balance 16,000
ENCUMBRANCES CONTROL 16,000
BUDGETARY FUND BALANCE RESERVED
FOR ENCUMBRANCES 16,000
Record the encumbrances that lapsed at
June 30, 20X5, which were included in
20X6 appropriations.
3. Property Taxes Receivable - Current 220,000
Allowance for Uncollectible Taxes -
Current 8,800
Revenue - Property Taxes 211,200
Record property tax levy for fiscal 20X6.
P17-21 (continued)
4. Cash 320,000
Property Taxes Receivable - Delinquent 15,000
Property Taxes Receivable - Current 198,000
Revenue - State Grants 50,000
Revenue - Sales Taxes 17,500
Revenue - Fines, Licenses, and Permits 11,000
Other Financing Source - Transfer
In from Capital Projects Fund 18,000
Due from Enterprise Fund 10,000
Revenue - Interest 500
Record cash collections in the general
fund for fiscal 20X6.
Allowance for Uncollectible Property
Taxes - Delinquent 7,000
Property Taxes Receivable - Delinquent 7,000
Write-off uncollectible property taxes
from fiscal 20X5.
Property Taxes Receivable - Delinquent 22,000
Allowance for Uncollectible Taxes - Current 8,800
Property Taxes Receivable - Current 22,000
Allowance for Uncollectible
Taxes - Delinquent 6,000
Revenue - Property Taxes 2,800