Accounting Entries
An Overview of Basic Year End and
Accrual Entries
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Steps for Closing the Year
• 1. Most importantly – Make sure your bank reconciliations agree to the general ledger.
• 2. Review the open order report and determine whether open orders are accounts payable
or reserve for encumbrances
•
•
Accounts Payable – Goods received or services rendered prior to June 30.
Reserve for Encumbrances – Goods ordered prior to June 30 but not received as of June 30.
• Make sure the open order report balances agree to the general ledger balances
• 3. Analyze balance sheet accounts
•
A detailed listing of what comprises the total account balance should be available for audit
• For example: a detailed list of what makes up the State Aid Receivable balance:
• Final state aid payment
$100,000
• Extraordinary aid
$50,000
• Non-public transportation aid
$10,000
• Total
$160,000
• 4. Post accrual entries
•
5. Post adjusting entries
• 6. Post year end entries
2
Accrual Entries
• Accrual of revenues earned but not received as of
June 30
• Example 1 – Accrual of extraordinary aid
Dr. 10-141 State Aid Receivable
Cr. 10-302 Revenue (10-3131)
$50,000
50,000
Desc: To record extraordinary aid receivable
3
Accrual Entries (Cont’d)
• Accrual of revenues earned but not received as of June 30
(cont’d)
• Example 2 – Accrual of tuition receivable (from other LEA)
Dr. 10-143 Intergovernmental Accounts Receivable-Other
Cr. 10-302 Revenue (10-1320)
$5,000
5,000
Desc: To record tuition due from other LEA
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Accrual Entries (Cont’d)
• Accrual of interfund receivable
• Example 3 – Accrual of interfund for interest received in capital projects fund
due to debt service fund
•
This entry assumes that the interest originally was posted as revenue in the
capital projects fund
Dr. 40-132 Interfund Accounts Receivable
Cr. 40-302 Revenue (40-1510)
$100
Dr. 30-302 Revenue (30-1510)
Cr. 30-402 Interfund Accounts Payable
$100
100
100
Desc: To record interest due to debt service fund
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Adjusting Entries
• Example 1 - To record an increase to capital reserve
(June Board resolution)
Dr. 10-770 Unreserved Fund Balance
Cr. 10-761 Res. Fund Balance-Capital Reserve
$100,000
100,000
Desc: To record increase to capital reserve
• Example 2 - To anticipate additional fund balance during the
year
• To anticipate prior year extraordinary aid excluded from
excess surplus
Dr. 10-770 Unreserved Fund Balance
Cr. 10-602 Expenditures (budget account #)
$75,000
75,000
6
Desc: To record anticipated fund balance
Adjusting Entries (Cont’d)
• Example 3 – To liquidate interfund
• To eliminate the interfund set up in accrual entry # 3
• Make the following entry at the time the cash is transferred
Dr. 40-101 Cash
Cr. 40-132 Interfund Accounts Receivable
$100
100
Dr. 30-402 Interfund Accounts Payable
Cr. 30-101 Cash
$100
100
Desc: To record liquidation of interfund
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Year End Entries
• This is an overview of basic year end entries. Your
general ledger software may or may not make these
entries for you during the year end closing process
• General Fund
• Example 1 – To close budgeted and actual revenues
and appropriations
June 30 Balances:
10-301 Estimated Revenues
10-302 Revenues
10-303 Budgeted Fund Balance
10-601 Appropriations
10-602 Expenditures
10-603 Encumbrances
Dr. 50,000,000
Cr. 55,000,000
Dr.
100,000
Cr. 50,100,000
Dr. 48,000,000
Dr.
5,000
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Year End Entries (Cont’d)
• General Fund (Cont’d)
• Example 1 – To close budgeted revenues and
appropriations (Cont’d)
Dr. 10-302 Revenues
Cr. 10-301 Estimated Revenues
Cr. 10-303 Budgeted Fund Balance
Cr. 10-770 Unreserved Fund Balance
$55,000,000
50,000,000
100,000
4,900,000
Desc: To close revenues
Dr. 10-601 Appropriations
Cr. 10-602 Expenditures
Cr. 10-303 Encumbrances
Cr. 10-770 Unreserved Fund Balance
$50,100,000
48,000,000
5,000
2,095,000
9
Desc: To close appropriations
Year End Entries (Cont’d)
• Special Revenue Fund - assumes revenue recorded on a
cash basis
• Example 1 – To adjust revenues at year end
• Expenditures and encumbrances exceeded cash received by
$10,000
• Make entries for individual grants
• Use 20-141 for State grants and 20-142 for Federal grants
Dr. 20-14X Intergovernmental Accounts Rec.
Cr. 20-302 Revenues
$10,000
10,000
Desc: To adjust revenues
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Year End Entries (Cont’d)
• Special Revenue Fund – assumes revenue recorded
on a cash basis
• Example 2 – To close actual revenues
• Cash received exceeded expenditures and encumbrances
exceeded by $4,000; carryover is allowed
• Make entries for individual grants
Dr. 20-302 Revenues
Cr. 20-481 Deferred Revenue
$4,000
4,000
Desc: To adjust revenues
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Year End Entries (Cont’d)
• Special Revenue Fund – assumes revenue recorded on a
cash basis
• Example 3 – To close actual revenues
• Cash received exceeded expenditures and encumbrances exceeded
by $3,500; carryover is NOT allowed
• Make entries for individual grants
• Use 20-411 for State grants and 20-412 for Federal grants
Dr. 20-302 Revenues
Cr. 20-41X Intergovernmental Accounts Payable
$3,500
3,500
Desc: To adjust revenues
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Year End Entries (Cont’d)
• Special Revenue Fund
• Example 4 – To close actual and actual revenues
and appropriations
• After making the previous entries, the revenue and
expenditures should be equal
Dr. 20-601 Appropriations
Cr. 20-301 Estimated Revenues
$4,100,000
4,100,000
Desc: To close budgeted revenues and appropriations
Dr. 20-302 Revenues
Cr. 20-602 Expenditures
Desc: To close actual revenues and expenditures
$4,100,000
4,100,000
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