Liabilities and fund balances

6.

2.

3.

4.

CHAPTER 10

SOLUTIONS TO MULTIPLE CHOICE QUESTIONS, EXERCISES AND PROBLEMS

MULTIPLE CHOICE QUESTIONS

1. c

5. c a a d

Appropriations (= 20,000,000 + 500,000)

Less expenditures

Less encumbrances

Available funds

$ 20,500,000

(7,600,000)

(75,000)

$ 12,825,000 b

The budget entry added $243,000 to fund balance, as follows:

Estimated revenues

Estimated other financing sources

Appropriations

Estimated other financing uses

Fund balance— unassigned

1,290,000

60,000

1,085,000

22,000

243,000

Therefore the fund balance prior to the budget entry was $285,000 - $243,000 = $42,000.

Solutions Manual, Chapter 10

©Cambridge Business Publishers, 2013

1

7.

8.

9. d

Closing entries are:

Property tax revenues

Speeding ticket revenues

Transfers in

Bond proceeds

Estimated revenues



Appropriations


General expenditures

Capital outlay

Debt service: principal

$58,000 + $37,000 = $95,000 d

Debt service: interest

Transfers out


950,000

400,000

8,000

50,000

1,290,000

60,000

58,000

1,085,000

22,000

1,015,000

25,000

2,000

8,000

20,000

37,000

General expenditures

Capital outlay

Debt service: principal payments

Debt service: interest payments

Total expenditures b

Cash

Taxes receivable, net

Due from other funds

Total

$1,015,000

25,000

2,000

8,000

$1,050,000

$371,000

68,000

12,000

$451,000


2 Advanced Accounting, 2nd Edition

10. b

Original assessment of 2013 taxes $1,000,000 - $25,000

End of year adjustment in allowance ($60,000 - $15,000) - $25,000

Excess cash collected on 2012 taxes $30,000 - $21,000

Total property tax revenue for 2013

Or alternatively,

2013 taxes collected

Uncollected 2013 taxes expected to be collected in early 2014

Excess collections on 2012 taxes $30,000 - $21,000

Total property tax revenue for 2013

$975,000

(20,000)

9,000

$964,000

$940,000

15,000

9,000

$964,000



3

EXERCISES

E10.1

1.

2.

3.

4.

5.

6.

7.

Identify Appropriate Fund special revenue capital project enterprise agency internal service pension trust agency

8.

9. capital project debt service or general fund

10. general

11. special revenue

12. debt service

13. permanent

14. private-purpose trust

E10.2

Identify Appropriate Fund(s)

1.

2.

3.

4. debt service fund special revenue fund general fund (for transfer to capital projects fund and for processing and receiving the assessments), capital projects fund (for construction activities) general fund (for processing assessments and receiving and distributing money from the assessments), capital projects fund (for construction activities), and (a) debt service fund

(for receiving the assessments from the general fund and servicing the debt); (b) agency fund (for processing the assessments, accounting for and servicing the debt) capital projects fund 5.

6. general fund (for transfer of withheld wages), pension trust fund

7. general fund

8. internal service fund

9. general fund

10. general fund

11. general fund (for transfer of withheld wages), agency fund

12. general fund (if museum activities are reported in the general fund), permanent fund

13. investment trust fund



E10.3 a.

Property Tax Rate and Revenues

Last year’s property tax revenue was: $7,920,000 = $.88 x ($900,000,000/$100) b. c. a.

Property tax revenue required is $8,645,000 = $9,500,000 - $855,000

$8,645,000/($950,000,000/$100) = $0.91 per $100 of assessed valuation

$0.88 x ($950,000,000/$100) = $8,360,000

E10.4 Computing Available Funds

All dollar amounts in thousands

Funds available for encumbrance consist of: appropriations - expenditures - outstanding encumbrances

Appropriations are $3,800,000 (= estimated revenue of $4,000,000 – budgetary surplus of $200,000). Thus, available funds = $3,800,000 - 2,500,000 - 225,000 = $1,075,000

The other numerical data given are irrelevant to this calculation. b. Yes, the budget appears ripe for cutting. Operating costs average about $248,000 per month [= (2,500,000 + 225,000)/11]. Yet there is $1,075,000 remaining to cover operating costs of $248,000 in the last month of the fiscal year.



5

E10.5 Reconstruct Budget Entry, Compute Fund Balance

The detailed budget may be reconstructed as follows:

Actual

Over

(Under) Budget

Revenues:

Property taxes

Fines

Intergovernmental

Fees and service charges

Miscellaneous

$2,975,000

6,000

12,000

500,000

4,000

$125,000

6,000

0

(75,000)

(1,000)

Total

Expenditures:

Administration

Public safety

Health and environment

Total

$3,497,000

$ 500,000

2,050,000

950,000

$3,500,000 a. Therefore, the budget entry was:

Estimated revenues

Fund balance-unassigned b.

Appropriations

$ 55,000

$ 1,000

6,000

4,000

$ 11,000

Fund balance, beginning of year

Budget entry effect (planned decrease)

Excess of actual revenues over budgeted revenues

Excess of budgeted expenditures over actual expenditures

Fund balance, end of year

Alternative calculation:

Fund balance, beginning of year

Excess of expenditures over revenues

Fund balance, end of year

Budget

$2,850,000

0

12,000

575,000

5,000

$3,442,000

$ 501,000

2,056,000

954,000

$3,511,000

3,442,000

69,000

3,511,000

$2,100,000

(69,000)

55,000

11,000

$2,097,000

$2,100,000

(3,000)

$2,097,000



E10.6 Transactions, Closing Entries, and Budgetary Comparison Schedule

All dollar amounts in thousands a. Journal entries:

(1)

Estimated revenues

Appropriations

51,000

51,000

Taxes receivable


41,000

41,000

(2)

Cash

Taxes receivable

18,500

18,500

Cash

Taxes receivable

26,500

26,500

(3)

Encumbrances

Fund balance—assigned

50,300

50,300

(4)


($50,300 - $13,000 = $37,300)

Encumbrances

37,300

37,300

Expenditures

Accounts payable

37,500

37,500

(5)

Accounts payable

Cash

44,000

44,000

(6)

Cash

Fee and service revenues

11,000

11,000



7

b. c. d.

Closing entries:


Fee and service revenues

Fund balance—unassigned

Estimated revenues

Appropriations


Expenditures

Encumbrances

$38,500 = $37,000 + $1,000 + $500

41,000

11,000

51,000

1,000

51,000

500

37,500

13,000

Revenues

Expenditures

Budgetary Comparison Schedule

For the Year Ended December 31, 2013

Change in fund balance (1)

Budget

$51,000

51,000

$ 0

Actual

$52,000

37,500

$14,500

Variance—

Favorable

(Unfavorable)

$ 1,000

13,500

$14,500

(1) Closing entries $1,000 + $500 plus increase in fund balance—assigned $13,000.



E10.7 a.

Property Tax Transactions

Taxes receivable— current

Allowance for uncollectible taxes—current

30,000,000

1,200,000

28,800,000 Revenues

To record tax levy and establish allowance for uncollectible taxes.

Cash

Revenues

9,009,000

91,000

Taxes receivable—current 9,100,000

To record collection of taxes prior to due date and reduction of revenues by 1% discount

($9,100,000 = $9,009,000/.99).

Cash

Taxes receivable—current

To record collection of taxes prior to January 1;

$18,900,000 = $30,000,000 - $9,100,000 - $2,000,000.

Taxes receivable— delinquent


To reclassify taxes declared delinquent on January 1.

18,900,000

18,900,000

2,000,000

2,000,000

Allow. for uncollectible taxes—current 1,200,000

Revenues

Allow. for uncollectible taxes—delinquent

600,000

1,800,000

To adjust the allowance for delinquent taxes to $1,800,000 (= $2,000,000 - $200,000).

Cash


Taxes Receivable— delinquent

Revenues

To record collection of delinquent taxes subsequent to January 1.

300,000

1,800,000

2,000,000

100,000

Expenditures

Cash

To record cash expenditures for the year.

25,000,000

25,000,000



9

b.

E10.8 a.

Balance sheet accounts

Cash ($850,000 + $9,009,000 + $18,900,000 + $300,000 - $25,000,000) $ 4,059,000

Fund balance:

Actual revenues ($28,800,000 - $91,000 - $600,000 + $100,000)

Estimated revenue

Decrease in fund balance with closing entry

Beginning fund balance after the budget entry

Ending fund balance

$28,209,000

29,000,000

(791,000)

5,200,000

$ 4,409,000

Inventory Accounting

Expenditures (1)

Inventory (2)

Consumption method

Cash

Accounts payable

17,900,000

100,000

15,500,000

2,500,000

Fund balance – unassigned (2)

Fund balance— nonspendable (2)

100,000

100,000

Expenditures

Purchases method

Cash

Accounts payable

18,000,000

15,500,000

2,500,000

Inventory (2)

Fund balance— nonspendable (2)

(1) 17,900,000 = 1,000,000 + 18,000,000 – 1,100,000

(2) 100,000 = 1,100,000 – 1,000,000

100,000

100,000



E10.9 a.

Closing Entries

Revenues

Appropriations b.

Revenues

Appropriations c.

Estimated revenues

Expenditures

Estimated revenues

Expenditures


Revenues


Estimated revenues

Appropriations

Expenditures

Fund balance—unassigned d.

Revenues


Estimated revenues

Appropriations

Expenditures


3,501,000

3,501,000

3,449,000

3,449,000

3,501,000

3,449,000

3,440,000

61,000

3,449,000

3,495,000

6,000

3,449,000

3,501,000

3,427,000

22,000

3,501,000

3,440,000

9,000

3,501,000

3,443,000

6,000



11

E10.10 Carryover Encumbrances a. Legal budgetary basis

Expenditures—prior year encumbrances

Accounts payable

To record invoices for goods and services ordered in 2012. b.

1,965,000

Fund Balance—assigned


1,900,000

65,000


To close encumbrances carried over from 2012 and related expenditures.

GAAP budgetary basis

1,965,000

1,965,000

Encumbrances


To restore encumbrances carried over from 2012.


Encumbrances

To reverse encumbrances for goods and services received.

1,900,000

1,900,000

1,900,000

1,900,000

Expenditures

Accounts payable

1,965,000

1,965,000

4.

5.

6.

To record invoices for goods and services.

No special closing entry is required; expenditures are closed in the normal manner.

E10.11 Interfund Transactions

1.

2.

Balance sheet asset: Due from special revenue fund

Statement of revenues, expenditures, and changes in fund balances: Transfers out, listed

3. under other financing uses

Statement of revenues, expenditures, and changes in fund balances: Transfer in, listed under other financing sources

Statement of revenues, expenditures, and changes in fund balances: Expenditures

Balance sheet asset: Due from enterprise fund

Balance sheet: reduces Due from special revenue fund



E10.12 a.

Adjusting and Closing Entries, Balance Sheet

Allowance for uncollectible taxes—delinquent




To reclassify receivables outstanding at year end as delinquent.

Revenues

To fully reserve delinquent taxes.

Fund balance— nonspendable

Supplies

To adjust ending supplies balance.


Revenues

Expenditures—prior year


To close prior year encumbrances and related expenditures.

Estimated revenues


To close revenues.

Appropriations

Expenditures

Encumbrances


To close expenditures and encumbrances.

800,000

450,000

350,000

30,000

450,000

800,000

800,000

30,000

420,000

30,000

13,650,000

13,000,000

650,000

11,000,000

10,500,000

300,000

200,000



13

b.

Assets

Cash

Taxes receivable-delinquent

(less $800,000 allowance for uncollectible delinquent taxes)


Supplies

Total

Liabilities and Fund Balances

$3,500,000 Accounts payable $1,800,000

0 Due to other funds 210,000

120,000 Fund balances:

250,000 Nonspendable

Assigned

$3,870,000 Total

250,000

300,000

1,310,000

$3,870,000

Graystone General Fund

Analysis of changes in fund balance - unassigned

(not required)

Fund balance (deficit), beginning (See Note 1)

Excess of revenues over expenditures:

($1,540,000)

Revenues

Expenditures (including encumbrances of $300,000)

$13,650,000

10,800,000

Fund balance, ending

Note 1: The beginning unassigned fund balance is calculated as follows:

2,850,000

$ 1,310,000

Fund balance, beginning (plug)

Add: amount credited in budget entry

($13,000,000 estimated revenues less $11,000,000 appropriations)

$(1,570,000)

2,000,000

Balance per trial balance

Beginning balance implied above

Add: adjustment for excess prior year's encumbrance over expenditure

Beginning balance as adjusted

430,000

(1,570,000)

30,000

$(1,540,000)



E10.13 a. 1.

General Fund Capital Asset and Long-Term Debt Transactions

Capital outlay

Cash, accounts payable

2,250,000

2,250,000

2.

Cash

Proceeds from sale of capital assets

370,000

370,000

3.



Cash

2,000,000

500,000

2,500,000 b. All transactions are reported in the general fund and Changes in Fund Balances.

= s Statement of Revenues, Expenditures,

Capital outlay of $2,250,000 is reported as an expenditure.

Proceeds from sale of capital assets of $370,000 is reported as other financing sources. c.

Debt service: principal of $500,000 and debt service: interest of $2,000,000 are reported as expenditures.

Effect on general fund unassigned fund balance: $(4,380,000) = - $2,250,000 + $370,000 -

$2,000,000 - $500,000.



15

E10.14 Identifying the Reporting Entity

1. The school district is a discretely presented component unit. The city is financially accountable for the school district—the city approves its budget and is legally liable for its debt. The city also provides significant funding. Financial results are discretely presented rather than blended because the district has a different governing body.

2. The housing authority is not a component unit of the city. The city is not financially accountable for it.

3. The landfill is a discretely presented component unit. The city is financially accountable because it controls the board and sets landfill rates.

4. The sewer district is not a component unit of the city, since the city does not control its board, and is not financially liable for its activities.

5. The building authority is a blended component unit of the city. It is a component unit because the city appoints the board and is liable for the authority = s debts. The building authority = s financial information is blended with that of the city because the authority provides services entirely to the city.



PROBLEMS

P10.1

1.

Determining the Reporting Entity

Megalopolis is the primary government. The Convention Authority (CA) should be included with Megalopolis for financial reporting purposes. The city appoints the CA's governing board and, even though it appears that the city will not be subsidizing the CA, bonds issued by the CA and backed (guaranteed) by the city impose a financial burden on the city. Megalopolis is financially accountable to its constituents for the activities of the

CA.

2. Megalopolis remains the primary government. However, the CA now appears to be a separate financial reporting entity. Even though the city appoints the governing board, the activities of the CA are essentially independent of the city. The CA may levy its own sales tax and issue its own bonds. The bonds are not backed by the city and, presumably, will be repaid with the CA's revenue. Council has no authority to approve or disapprove the CA's plans and is neither financially impacted by nor financially accountable for the CA's activities.

3. Gigantic County is the primary government. Each volunteer fire department is a separate not-for-profit financial reporting entity, not a component of the Gigantic county reporting entity. The county has no control over the fire departments and contracts for their services voluntarily. County expenditures for the capital equipment become analogous to the contractual expenditures for fire-fighting services.

4. The City of Winitville is the primary government. The Winitville Board of Education is included with the city for financial reporting purposes. Separate election of school board members is more than offset by the city's influence over the Board's ability to spend, through its annual appropriation. Moreover, because the city provides the funding for the

Board of Education, the Board is fiscally dependent upon the city. In effect, the city is accountable to taxpayers and creditors for the school board's operations.

5. The State of Michigan is the primary government. The Great Lakes Protection Fund

(GLPF) is a separate joint venture not included with the state for financial reporting purposes. Although Michigan is represented on the Board of the GLPF, the GLPF has its own Articles of Incorporation and Michigan does not have control over decisions made.

The GLPF is also not fiscally dependent on the State of Michigan.

6. The State of Georgia is the primary government. The Georgia Public Telecommunications

Commission is included as a component unit in the State financial reports. The State has control over the Commission's ability to spend, and the Commission is financially accountable to the State.



17

P10.2 a.

General Fund Entries and Financial Statements

Journal entries for 2013:

Estimated revenues


Taxes receivable

To accrue taxes receivable.

Tax revenues

7,450,000

1,650,000

Appropriations 9,100,000

To record 2013 budget. Estimated revenues are ($2,700,000 + $3,500,000 + $1,000,000 +

$250,000) and appropriations are ($6,700,000 + $1,150,000 + $750,000 + $350,000 +

$150,000).

2,700,000

2,700,000

2,700,000

2,700,000

Cash

Taxes receivable

To record collection of property taxes.

Waste management expenditures

Cash

To record expenditures for waste management.

6,680,000

6,680,000

1,120,000

1,120,000

Court expenditures

Cash

To record expenditures for court costs.

Cash

Accounts receivable—waste management

To record receipt of payment on 2012 waste management bills.

Cash

Accounts receivable— waste management

Waste management revenues

To record revenues from waste management.

Cash

Court fines

To record revenues from court fines.

400,000

3,390,000

210,000

920,000

400,000

3,600,000

920,000



Salaries and operating expenditures

Cash

To record salaries and operating expenditures.

Investments

Interest revenue

To record interest revenue from investments.

Miscellaneous expenditures

Cash

To record miscellaneous expenditures.

Supplies expenditures

Waste management supplies

To record consumption of supplies inventory.



To adjust the nonspendable fund balance.

Closing entries:

Tax revenues

Water revenues

Court fines

Interest revenue

Estimated revenues


To close revenues to fund balance.

Appropriations

Waste management expenditures

Court expenditures

Salaries and operating expenditures

Miscellaneous expenditures

Supplies expenditures


To close expenditures to fund balance.

745,000

235,000

149,000

340,000

340,000

745,000

235,000

149,000

340,000

340,000

2,700,000

3,600,000

920,000

235,000

7,450,000

5,000

9,100,000

6,680,000

1,120,000

745,000

149,000

340,000

66,000



19

b. Town of Amherst

General Fund

Statement of Revenues, Expenditures, and

Changes in Fund Balance


Revenues:

Property taxes

Waste management service

Court fines

Interest

Expenditures:

Waste management department

Court costs

Salaries and expenditures

Supplies

Miscellaneous

Total expenditures

Excess of revenues over (under) expenditures

Fund balance—January 1, 2013

Fund balance—December 31, 2013

$ 2,700,000

3,600,000

920,000

235,000

$ 7,455,000

$ 6,680,000

1,120,000

745,000

340,000

149,000

9,034,000

(1,579,000)

10,280,000

$ 8,701,000

Town of Amherst

General Fund

Balance Sheet

December 31, 2013

Liabilities and fund balance Assets

Cash (1)

Investments

Accounts receivable—waste management

$2,216,000 Fund balance—nonspendable $ 40,000

6,235,000 Fund balance –unassigned (2) 8,661,000

210,000

Waste management supplies 40,000

$8,701,000

________

$8,701,000

(1) $2,216,000 = $3,500,000 + $2,700,000 - $6,680,000 - $1,120,000 + $400,000 +

$3,390,000 + $920,000 - $745,000 - $149,000.

(2) $8,701,000 = $9,900,000 - $1,650,000 + $5,000 + $66,000 + $340,000.



P10.3

(in thousands)

General Fund Adjustments and Financial Statements a. Adjusting and closing entries for the general fund:

(1)

Due from enterprise fund

Accounts receivable

To reclassify receivable from Golf Course Fund for advance.

(2a)

Taxes receivable—delinquent


To reclassify outstanding taxes as delinquent.

(2b)

Revenues


2,000

10,000

10,000

2,000

10,000

10,000

To record allowance for uncollectible taxes.

(3)

Expenditures

Bonds payable

40,000

40,000

To correct recording of retirement of general obligation bonds and payment of interest.

(4)

Supplies inventory

Fund balance—nonspendable

3,500

To record supplies inventory at year end and classify this amount as fund balance— nonspendable.

(5)

3,500

Encumbrances


To record encumbering of appropriations for purchase orders outstanding at year end.

(6)

Due from State

Revenues

9,000

9,000

To record Town's portion of gasoline taxes collected by State.

4,500

4,500



21

b.

(7a)

Expenditures

Town property

To correct recording of purchase of equipment.

(7b)

Town property


20,000

1,000

20,000

1,000

To correct recording of sale of equipment.

Closing entries:

Appropriations

Expenditures

Revenues


380,000

375,000

Encumbrances


4,500

To close expenditures and encumbrances; $375,000 = $315,000 + $40,000 + $20,000.

500

439,000

1,000


Estimated revenues

20,000

460,000

To close revenues accounts; $439,000 = $440,000 - $10,000 + $9,000.

Town of Fountain Inn

General Fund

Statement of Revenues, Expenditures and Changes in Fund Balances

For the Year Ended June 30, 2014

(in thousands)

Revenues

Expenditures


Other financing sources (uses):


Excess of revenues and other financing sources over expenditures and other financing uses

$ 439,000

375,000

64,000

1,000

65,000

Fund balances—July 1, 2013 (1)

Increase in inventories

Fund balances—June 30, 2014 (2)

(44,000)

3,500

$ 24,500



(1) The beginning total fund balance is $(44,000), calculated as follows:

Fund balances, beginning (plug)

Add: Amount credited in budget entry ($460,000 estimated revenues less $380,000 appropriations)

Amount per trial balance

(2) Nonspendable

Assigned

Unassigned

Total fund balances

$ 3,500

4,500

16,500

$24,500

(in thousands)

Assets

Cash


Allowance for uncollectible taxes

Due from enterprise fund

Due from State

Supplies inventory

Total assets

Liabilities and fund balances

Accounts payable

Fund balances:

Nonspendable

Assigned

Unassigned

Total liabilities and fund balances

Town of Fountain Inn

General Fund

Balance Sheet

June 30, 2014

$ (44,000)

80,000

$ 36,000

$ 10,000

(10,000)

$ 28,000

0

2,000

9,000

3,500

$ 42,500

$ 18,000

3,500

4,500

16,500

$ 42,500



23

P10.4 Reconstructing General Fund Journal Entries

(in thousands)

Cash

Investments

To record liquidation of investments.

Due from state government

Revenues

To record anticipated state grant.

Cash

Due from federal government

To record receipt of grant from federal government.


Accounts payable

To record expenditures for prior year's encumbrances.

Expenditures

To record expenditures.

Computation of expenditures:

Accounts payable

Unassigned fund balance decrease ($78,000 - $120,000)

Decrease from budget entry

Increase from prior year's encumbrances

Revenues less than budgeted

Expenditures less than appropriations (plug)

Unassigned fund balance decrease

Appropriations

Excess of appropriations over expenditures

Expenditures

23,000

23,000

49,000

49,000

105,000

105,000

7,000

7,000

92,000

92,000

$ (42,000)

(30,000)

1,000

(16,000)

3,000

(42,000)

95,000

(3,000)

$ 92,000



Accounts payable

Cash

109,000

To record payment of accounts payable; $109,000 = $42,000 + $7,000 +

$92,000 - $32,000.

109,000

Revenues


To close revenues.

Estimated revenues

49,000

16,000

65,000

92,000

3,000

Appropriations

Expenditures


95,000

To close expenditures.




8,000

To close prior year encumbrance accounts.

General Fund—Corrections, Adjustments, and Financial Statements

7,000

1,000

P10.5 a. Reclassification and adjusting entries for general fund (in thousands) :

(1)

Due from Water Utility Fund

Accounts receivable

To reclassify receivable from water utility fund.

1,500

1,500

(2a)



To reclassify current taxes now considered delinquent.

(2b)

30,000

Revenues


24,000

To establish an allowance account for taxes estimated to be uncollectible.

30,000

24,000



25

(3)

Expenditures

Bonds payable

52,000

52,000

To correct recording of retirement of general obligation bonds and payment of interest.

(4)

Supplies inventory


44,000

44,000

To record supplies inventory at June 30, 2013: Inventory on hand at June 30, 2013 =

$128,000 - $84,000 = $44,000.

(5a)


Expenditures

11,200

11,200

To record purchase orders outstanding at June 30, 2012, and charged to expenditures in the following year.

(5b)



To adjust fund balance at beginning of year.

(5c)

11,200

11,200

Encumbrances


To record encumbrances for purchase orders at June 30, 2013.

(6)

5,000

5,000

34,000

34,000

Due from State Revenue Dept.

Revenues

To record Town's portion of state tax due from State.

(7)

Expenditures

General property

To correct recording of purchase of equipment.

General property


To correct recording of sale of equipment.

90,000

4,600

4,600

90,000



Closing entries:

Appropriations

Revenues


Expenditures

520,000

512,800

Encumbrances


5,000

2,200

To close expenditures and encumbrances;$512,800 = $382,000 + $52,000 - $11,200 +

$90,000.

570,000

4,600

Estimated revenues


To close revenues and other financing sources; $570,000 = $560,000 - $24,000 + $34,000.



11,200

11,200

To close prior year encumbrance accounts.

520,000

54,600



27

b. Salleytown

Statement of Revenues, Expenditures, and Changes in Fund Balances

General Fund


(in thousands)

Revenues

Expenditures:

$ 570,000

Operating expenditures (1)



Capital outlay

Excess of revenues over expenditures

$ 370,800

40,000

12,000

90,000 512,800

57,200





Prior year expenditures

Increase in nonspendable fund balance


4,600

61,800

7,700

(11,200)

44,000

$ 102,300

(1) Operating expenditures = total expenditures - debt service payments - capital outlays =

$512,800 - 52,000 - 90,000.

(2) Fund balances—July 1, 2012: Because the budget is balanced (estimated revenues = appropriations), the fund balance—unassigned reported in the trial balance equals the fund balance—unassigned prior to the budget entry.

(3) Fund Balances—June 30, 2013 = the sum of all fund balances; see Balance Sheet in requirement c.: $102,300 = $5,000 + $44,000 + $53,300.



c. Salleytown

Balance Sheet—General Fund

As of June 30, 2013

(in thousands)

Assets

Cash

Short-term investments

Accounts receivable

Due from Water Utility

Due from State

Taxes receivable—delinquent (net of allowance of $24,000)

Supplies

Total assets


Accounts payable

Fund balances:

Nonspendable

Assigned

Unassigned

Total fund balances


P10.6 Comprehensive General Fund Review

Requirement a:

1. D

Requirement b:

6. D

Requirement c:

11. D

2. C

3. C

4. C

5. N

7. N

8. C

9. C

10. N

12. C

13. N

14. N

15. N

Requirement d:

16. C

17. D

18. D

19. C

20. N

Requirement e:

21. N

22. N

23. C

24. D

25. N

Requirement f:

26. C

27. N

28. D

29. D

30. C

31. D

32. C

33. N

34. N

35. N

36. N

Requirement g:

37. C

38. N

39. D

$ 16,800

40,000

10,000

1,500

34,000

6,000

44,000

$152,300

$ 50,000

44,000

5,000

53,300

102,300

$152,300



29

P10.7 a.

Comprehensive General Fund—Entries and Statements

Journal entries for fiscal 2014 (in thousands) :

(1a)

Estimated revenues


Appropriations


To record budget.

(1b)


Revenues

Allow. for uncollectible taxes—current

30,000

2,000

31,200

800

37,000

30,000

7,000

To record tax levy.

(2)

Cash


30,500

30,500

To record collection of taxes.

(3a)

Allowance for uncollectible taxes—current 1,250

Revenues


500

750

To increase revenue by the additional $500 (= $5,500 - $5,000) collected on 2013 taxes, and write off remaining 2013 receivables.

(3b)


Revenues

4,600

4,600

To correct allowance account. Taxes receivable = $6,250 + $37,000 - $30,500 - $750 =

$12,000. Allowance account = $7,000. Ending balance in allowance account should be

20% x $12,000 = $2,400. Adjustment = $4,600.

(4)

Cash


100

100

To record sale of old desks.



(5)

Expenditures

To record purchase of desks.

(6)

Expenditures

Cash

Accounts payable

To record expenditures for repairs and cleaning.

(7)

Expenditures

300

400

28,000

300

400

To record expenditures.

(8a)

Accounts payable

Expenditures

Inventory

To adjust inventory to year-end balance of $1,500.

(8b)

500

28,000

500


Encumbrances

To record purchase orders.

(10)


500

500

To adjust nonspendable fund balance to $1,500.

(9a)

Accounts payable 31,400

Cash

To record payment of accounts payable; $31,400 = $3,000 + $400 + $28,000.

31,400

(9b)


600

600

500

500


To cancel 2013 encumbrances.

(11)


Transfer out

To record transfer to enterprise fund.

Cash

750

750



31

b.

Closing entries at June 30, 2014:

Revenues


35,100

100


Estimated revenues

To close revenues and other financing sources; $35,100 = $30,000 + $500 + $4,600.

5,200

30,000

Appropriations


Expenditures

Encumbrances

Transfer out


To close expenditures and encumbrances;

$29,200 = $300 + $400 + $28,000 + $500.

Quarryville School District

General Fund


Changes in Fund Balances


31,200

800

29,200

600

750

1,450

Revenues

Expenditures

Excess of revenues over expenditures


Transfer out



Fund balances—July 1, 2013

Fund balances—June 30, 2014

* $2,000 + $500 + $5,500

$ 35,100

29,200

5,900

(750)

100

5,250

8,000*

$ 13,250



(in thousands)

Assets

Cash

Taxes receivable—current (net of $2,400 allowance for uncollectible taxes)

Inventory

Total

Quarryville School District

General Fund

Balance Sheet

June 20, 2014


Fund balance:

Nonspendable

Assigned

$ 2,150

9,600

1,500

$13,250

$ 1,500

600

Unassigned

Total

11,150

$13,250

The T-accounts below show computations for ending balances of cash, taxes receivable, allowance for uncollectible taxes, and fund balance. The numbers are keyed to the journal entries from requirement a.

Beginning balance

Cash

4,000

(2) 30,500

(4) 100

300 (5)

31,400 (9a)

750 (11)

Ending balance 2,150

Beginning balance


6,250

(1b) 37,000 30,500 (2)

750 (3a)

Ending balance 12,000


Beginning balance

(3a) 1,250

(3b) 4,600

Ending balance

1,250

7,000 (1b)

2,400



33

Fund Balance—unassigned

(1a) 2,000

Beginning balance

Ending balance

5,500

500 (8b)

500 (10)

5,200 (c)

1,450 (c)

11,150

(Note: c-closing entry)

Employee Compensated Absences P10.8 a.

Expenditures for compensated absences

Cash b.

No liability for future compensated absence payments is reported.

25,000,000

25,000,000 c.

Compensated absence expense

Liability for compensated absences

(1)19,164,000

5,836,000

25,000,000 Cash

(1) $19,164,000 = $214,113,000 - $219,949,000 + $25,000,000.

The general fund would report a total liability for compensated absences at fiscal year-end of $214,113,000.

The general fund balance sheet, prepared using modified accrual accounting, will not reveal any information concerning the State’s future obligation for compensated absences.

Expenditures are recorded as incurred.



P10.9 a.

General Fund Reporting

Budget and encumbrance entries b.

Estimated revenues



Appropriations


To record budget entry.

8,500,000

500,000

50,000

Encumbrances


To re-establish beginning of year encumbrances.

Net effect on fund balance—unassigned: $78,000 - $50,000 = $28,000 cr

Entries made during 2014 for property taxes (not required):

78,000

8,800,000

250,000

78,000

Property taxes receivable— current

To accrue property taxes for 2014.



Allow. for uncoll. taxes— current

Property taxes receivable—current

To write off current property taxes.


Property taxes receivable—delinquent

To write off delinquent property taxes.

8,600,000

100,000

8,500,000

60,000

10,000

60,000

10,000



35

c. d.

Cash


Property taxes receivable—delinquent


To record collection of delinquent property taxes.

Cash


To record collection of current property taxes;

$8,420,000 = $8,600,000 - ($100,000 - $40,000) - $120,000.

15,000

15,000

8,420,000

Property taxes receivable— delinquent



Allow. for uncoll. taxes— delinquent


120,000

40,000

80,000

To fully reserve unpaid property taxes and reclassify them as delinquent.

Property tax revenues for 2014 = $8,500,000 + $15,000 - $80,000 = $8,435,000.

Cash collected for 2014 = $8,420,000 + $15,000 = $8,435,000.

Zero. Interest is not accrued until the year it will be paid.

Other entries for 2014 (not required):

Cash

To record issuance of bonds.

Cash

Bond proceeds


To record sale of equipment.

500,000

6,000

15,000

15,000

8,420,000

120,000

120,000

500,000

6,000



Transfers out

Cash

To record transfers to capital projects and enterprise funds.

Expenditures

Cash or accounts payable

To record expenditures for the year.

Encumbrances


To record net increase in encumbrances for the year.

Closing entries for 2014:


Bond proceeds



Estimated revenues


To close revenue and other financing sources accounts.

250,000

8,720,000

50,000

8,435,000

500,000

6,000

59,000

250,000

8,720,000

50,000

8,500,000

500,000

Appropriations



Expenditures

Transfers out

Encumbrances

To close expenditure, encumbrance, and other financing uses accounts.

8,800,000

250,000

50,000

8,720,000

250,000

130,000



37

e.


Expenditures

City of Middletown

Budgetary Comparison Schedule

For the year 2014



Transfers out


Bond proceeds

Total other financing sources

Budget

$ 8,500,000

8,800,000

(300,000)

(250,000)

---

250,000

500,000

Actual

$8,435,000

8,720,000

(285,000)

(250,000)

256,000

6,000

500,000

Excess of revenues & other sources over (under) expenditures

& other uses $ (50,000) $ (29,000)

P10.10 a.

General Fund—Entries and Financial Statements

2014 journal entries

Beginning of year:

Encumbrances

To restore beginning of year encumbrances.

Estimated revenues— property taxes


Estimated revenues— licenses and fines

Estimated revenues—federal grants


Appropriations— general government

Appropriations— human services


To establish budget.

6,000

500,000

35,000

100,000

31,000

Variance B

Favorable

(Unfavorable)

$ (65,000)

80,000

15,000

---

6,000

---

6,000

$ 21,000

6,000

250,000

402,000

14,000






500,000

50,000

450,000

To accrue property taxes.

Cash


430,000

To record collection of current property taxes.

Cash


60,000

40,000



To record collection of delinquent property taxes and write-off of remainder.

430,000

65,000

35,000





70,000

50,000

5,000

70,000

To reclassify uncollected taxes as delinquent and provide for a $55,000 allowance.



Revenues—federal grants

55,000

100,000

100,000

To accrue federal grants.

Cash


To record collection of federal grants.

Cash

Revenues—licenses and fines

To record collection of license and fine revenues.

95,000

34,000

95,000

34,000



39

Inventories ($18,000 -

$15,000)

Accounts payable ($30,000 -

$15,000)

3,000

15,000

652,000

To record cash expenditures.

Cash



3,000

To adjust the nonspendable fund balance to the ending $18,000 inventory balance.

3,000

Expenditures—general government

Expenditures—human services


Encumbrances

To record net reduction in encumbrances for the year.

234,000

400,000

2,000

2,000

14,000

14,000

Transfers out

Cash

To record transfers to debt service fund.

Cash


To record collection of cash advance to enterprise fund.


Cash

To record advance to capital projects fund.

Cash

Due to other funds

To record advance from enterprise fund.

2,000

5,000

25,000

2,000

5,000

25,000



Closing entries:


($450,000 + $35,000 -

$5,000)

Revenues—licenses and fines

Revenues—federal grants


Estimated revenues—property taxes

Estimated revenues—licenses and fines

Estimated revenues—federal grants

To close revenues.

Appropriations— general government

Appropriations—

Human Services



Expenditures—human services

Transfers out

Encumbrances


To close expenditures, encumbrances and transfers.

480,000

34,000

100,000

21,000

500,000

35,000

100,000

250,000

402,000

14,000

234,000

400,000

14,000

4,000

14,000



41

b. (1)

City of Los Alvos


Changes in Fund Balances C General Fund


Revenues

Property taxes

Licenses and fines

Federal grants

Total revenues

Expenditures

General government

Human services

Total expenditures


Other financing sources (uses)

Transfers out

Total other financing sources (uses)

Excess of revenues and other financing sources over (under) expenditures and other financing uses

Fund balances—December 31, 2013

Fund balances—December 31, 2014

(2)


Balance Sheet C General Fund

December 31, 2014

Assets

Cash

Property taxes receivable—delinquent (net)



Inventories

Total assets


Accounts payable

Due to other funds

Total liabilities

Fund balances:

Nonspendable

Assigned

Unassigned

Total fund balances




$ 480,000

34,000

100,000

614,000

234,000

400,000

634,000

(20,000)

(14,000)

(14,000)

(34,000)

52,000

$ 18,000

$ 5,000

15,000

5,000

15,000

18,000

$ 58,000

$ 15,000

25,000

40,000

18,000

4,000

(4,000)

18,000

$ 58,000

(3)

Revenues

Property taxes

Licenses and fines

Federal grants

Total revenues

Expenditures

Total expenditures



Budgetary Comparison Schedule C General Fund


Budget Actual

$ 500,000 $ 480,000

General government

Human services

35,000

100,000

635,000

250,000

402,000

652,000

(17,000)

34,000

100,000

614,000

234,000

400,000

634,000

(20,000)


Transfers out


Excess of revenues and other financing sources over (under) expenditures and other financing uses



14,000

(14,000)

(31,000)

52,000

14,000

(14,000)

(34,000)

52,000

$ 21,000 $ 18,000

Variance--

Favorable

(Unfavorable)

$ (20,000)

( 1,000)

--

(21,000)

16,000

2,000

18,000

(3,000)

--

--

(3,000)

--

$ (3,000)



43

P10.11 a. b. c.

General Fund—Budget and Closing Entries, Financial Statements

Estimated revenues


Appropriations


260,000

2,000

257,000

4,800

Fund balance— unassigned 200


In addition to the budget entry, an entry was made at the beginning of the year to reverse the encumbrances write-off from 2013:

Encumbrances 800

Fund balance— unassigned 800

Therefore the beginning fund balance—unassigned was $23,000 - $200 - $800 = $22,000.

Revenues—property taxes

Revenues—income taxes

Revenues—fines and licenses

Revenues—state grants



To close revenues and other financing sources.

Appropriations


Estimated revenues


Encumbrances


Capital outlay

55,000

180,000

18,000

6,000

2,300

700

260,000

2,000

257,000

4,800

500

130,400

11,000

Transfers out

Debt service—interest

Debt service—principal


To close expenditures and other financing uses.

4,500

35,000

80,000

400



d. City of Akron General Fund



(in thousands)

Revenues

Property taxes $ 55,000

Income taxes

Fines and licenses

State grants

Total revenues

180,000

18,000

6,000

259,000

Expenditures

General government

Capital outlay

Debt service

Interest payments

Principal payments

Total expenditures


130,400

11,000

35,000

80,000

256,400

2,600



Transfers out



Fund balance—December 31, 2013 (1)

Fund balance—December 31, 2014 (2)

(1) Fund balance—unassigned =

Fund balance—assigned =

(2) Fund balance—unassigned: $23,000 - $700 + $400 =

Fund balance—assigned =

$22,000

800

$22,800

$22,700

500

$23,200

2,300

(4,500)

(2,200)

400

22,800

$ 23,200



45

e.

P10.12 a.

(in thousands)

Assets

Cash

Investments

Property taxes receivable (net)


Total assets


City of Akron General Fund

Balance Sheet

At December 31, 2014

Accounts payable

Due to other funds

Total liabilities

Fund balances:

Assigned

Unassigned

Total fund balances


General Fund—Entries and Financial Statements

Estimated revenues


Appropriations



Encumbrances


To reverse outstanding encumbrance closing entry from last year.

State grant receivable

To accrue state grant.

State grant revenue

410,500

9,500

370,000

50,000

3,000

40,000

3,000

40,000

$ 5,000

14,000

36,000

9,000

$ 64,000

$ 33,200

7,600

40,800

500

22,700

23,200

$ 64,000



b. Transactions for the year:

Taxes receivable

Property tax revenue


To record property tax bills.

Cash

To record property tax collection.

Taxes receivable

Cash

To record state grant cash received.

Cash

To record collection of delinquent taxes.



Allowance for uncollectible taxes— delinquent


To write off uncollected delinquent taxes.

Transfers out

Cash

To record transfer to special revenue fund.

Cash

Fee and license revenue

To record fee and license revenue received in cash.


Encumbrances

Expenditures

Accounts payable

To record receipt of inventories on purchase orders sent last year.

300,000

285,000

15,000

280,000

280,000

25,000

10,000

22,500

50,000

65,000

3,000

3,200

25,000

10,000

22,500

50,000

65,000

3,000

3,200



47

Due from capital projects fund

Cash

To record advance to capital projects fund.

Cash

Due from special revenue fund

To record collection of loan to special revenue fund.

Expenditures

Accounts payable

To record inventories purchased on account.

Expenditures

Accounts payable

To record other expenditures for the year.

Encumbrances


To record purchase orders outstanding at year-end.

Accounts payable

To record payment of accounts payable.

Adjusting entries at year-end:

Cash


Inventories

To adjust the inventories balance to current year-end amount.



To fully reserve uncollected taxes at year-end.



Taxes receivable

Allowance for uncollectible taxes— delinquent

To reclassify uncollected taxes as delinquent.


48

8,000

12,000

45,000

320,000

320,000

4,000

367,000

367,000

1,500

5,000

20,000

20,000

8,000

12,000

45,000

4,000

1,500

5,000

20,000

20,000

Advanced Accounting, 2nd Edition

c. Closing entries:


Fee and license revenue

State grant revenue


Estimated revenue

To close revenues against estimated revenues.

290,000

65,000

40,000

15,500

410,500

Appropriations



Transfers out

370,000

50,000

2,200

50,000

Expenditures

Encumbrances

368,200

4,000 d.

To close expenditures and other financing uses against appropriations and estimated other financing uses.

Montana County General Fund



(in thousands)

Revenues:

Property taxes $ 290,000

Fees and licenses

State grant

Total revenues

Expenditures


65,000

40,000

395,000

(368,200)

26,800

(50,000)

(23,200)


Transfers out

Excess of revenues over (under) expenditures and other financing uses


Change in fund balance—nonspendable


(1) Fund balance—assigned



(2) Fund balance—assigned



$ 3,000

7,500

124,500

$135,000

$ 4,000

6,000

100,300

$110,300

135,000

(1,500)

$ 110,300



49

e. Montana County General Fund

Balance Sheet

At June 30, 2013

(in thousands)

Assets

Cash

Property taxes receivable (net of $20,000 allowance for uncollectibles)


Due from special revenue fund

Due from capital projects fund

Inventories

Total assets


Accounts payable

Fund balances:

Assigned

Nonspendable

Unassigned

Total fund balances


$ 87,000

--

15,000

3,000

8,000

6,000

$ 119,000

$ 8,700

4,000

6,000

100,300

110,300

$ 119,000



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