1. The City recognizes an increase of $292 in Deferred Revenues as a year-end ad
ID: 2476115 • Letter: 1
Question
1. The City recognizes an increase of $292 in Deferred Revenues as a year-end adjustment to yield a balance in that account of the total property taxes receivable that are not expected to be collected within 60 days.
2. The City makes the required closing entries to close out the budgetary and operating accounts. In addition, the City closes out the remaining $460 balance of budgetary ENCUMBRANCES outstanding and formally charges that balance to Fund Balance – unassigned since the outstanding invoices are expected to be honored in the next fiscal year.
Prepare journal entries in the General Fund for each of the events presented above. (all amounts in $1,000s).
Explanation / Answer
1. Cash Account Debit $292000
Deferred revenue Credit $292000
After 60 days when the amount is received Deferred revenue would be Debited by $292 and the total property taxes receivable would be credited by the same amount.
2. Budgetary ENCUMBRANCES Debit $460000
Funds Credit $460000
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