4–C. Part 1. General Fund Transactions Required: a. Record journal entries for t
ID: 2487135 • Letter: 4
Question
4–C. Part 1. General Fund Transactions
Required: a. Record journal entries for the following transactions for FY 2014. Make any computations to the nearest dollar. Journal entry explanations are not required. Use control accounts for revenues, expenditures and budgetary accounts. It is not necessary to reflect subsidiary ledger entries.
(1) Encumbrances of $ 12,000 for purchase orders outstanding at the end of 2013 were re-established.
(2) The January 1, 2014, balance in Deferred Revenues relates to the amount of the 2013 levy that was expected to be collected more than 60 days after December 31. This amount should be recognized as 2014 revenues.
(3) A general tax levy in the amount of $6,350,000 was made. It is estimated that 2 percent of the tax will be uncollectible.
(4) Tax anticipation notes in the amount of $400,000 were issued.
(5) Goods and supplies related to all encumbrances outstanding as of December 31, 2013 were received, along with invoices amounting to $11,800; the invoices were approved for payment. The City maintains immaterial amounts in supply inventories and it is the practice of the City to charge supplies to expenditure when received.
(6) All vouchers and the amount due other funds were paid.
(7) The General Fund collected the following in cash: o prior year taxes, $160,000; o interest and penalties receivable on prior year taxes, $3,500; o current taxes, $5,900,000; o $210,000 previously recorded as due from the state government; o licenses and permits, $780,000; o sales taxes, $2,870,000; and o miscellaneous revenues, $330,000.
(8) Purchase orders and contracts were issued in the amount of $3,476,000.
(9) Payrolls for the General Fund totaled $5,065,000. Of that amount, $498,000 were withheld for employees’ federal income taxes and $357,000 were withheld for employees’ FICA and Medicare tax liability; the balance was paid in cash. The encumbrance system is not used for payrolls.
(10) The liability for the city’s share of FICA and Medicare taxes, $357,000, was recorded as was the liability for state unemployment taxes in the amount of $33,000.
(11) Invoices for most of the supplies and services ordered in transaction 8 were received in the amount of $3,370,300 and approved for payment. The related encumbrance amounted to $3,385,000.
(12) Tax anticipation notes were paid at maturity, along with interest in the amount of $16,000.
(13) Notification was received that an unrestricted state grant in the amount of $312,000 would be received during the first month of the next year.
(14) The General Fund recorded a liability to the Water and Sewer Fund for services in the amount of $45,000 and to the Stores and Services Fund for supplies in the amount of $313,200; $300,000 of the amount due the Stores and Services Fund was paid.
(15) The General Fund recorded an amount due of $42,000 from the state government, representing sales taxes to be collected from retail sales taking place during the last week of the year.
(16) The General Fund paid vouchers in the amount of $3,007,000 and paid the amounts due the federal and state governments. The General Fund also transferred to the debt service funds cash in the amount of $1,662,000 for the recurring payment of principal and interest.
(17) All required legal steps were accomplished to increase appropriations by the net amount of $212,000. Estimated revenues were increased by $203,000.
(18) The City Council authorized a write-off of $83,200 in delinquent property taxes and corresponding interest and penalties amounting to $400.
(19) Interest and penalties receivable on taxes were accrued in the amount of $13,000; $1,100 of this amount is expected to be uncollectible.
(20) It is estimated that $26,000 of the outstanding taxes receivable will be collected more than 60 days beyond the fiscal year-end.
b. Post the entries to the general ledger.
c. Prepare and post the closing entries for the General Fund. Outstanding encumbrances at year end are classified as Assigned Fund Balance and all remaining net resources are classified as Unassigned Fund Balance.
d. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year ended December 31, 2014. Confirm that the revenue and expenditure control accounts agree with the following detail and use this information in the Statement:
Explanation / Answer
Journal enteries
Budgetary fund balance – Reserve for encumbrance ………. 12,000
2. Deferred Revenues – Property taxes …… 19,000
Revenues control ………………………. 19,000
3. Taxes receivable – current ……….. 6,350,000
Estimated uncollectible taxes ………….. 127,000
Revenues control ……………………….. 6,223,000
4. Cash ………………………………. 400,000
Tax Anticipation Notes Payable ………. 400,000
5. Budgetary fund balance – Reserve for encumbrances ….. 12,000
Encumbrances control ……………………………………. 12,000
Expenditures control (2013) ………… 11,800
Accounts payable .................................... 11,800
6. Accounts payable …………. 115,800
Due to other funds ………… 27,000
Cash …………………………….142,800
7. Cash ………….. 10,235,500
Taxes Receivable (prior year) ……..160,000
Interest and penalties receivable ….. 3,500
Taxes receivable – current ………… 5,900,000
Due from state government………… 210,000
Revenues control ………………….. 3,980,000
8. Encumbrances control …………. 3,476,000
Budgetary F/B Reserve for encumbrances …. 3,476,000
9. Expenditures control ………… 5,065,000
Due to federal government ……….. 855,000
Cash ……………………………… 4,210,000
10. Expenditures control ………… 390,000
Due to federal government ……….. 357,000
Due to state government ………….. 33,000
11. Budgetary fund balance – Reserve for encumbrances ……. 3,385,000
Encumbrances control …………………………………………3,385,000
Expenditures control …………….. 3,370,300
Accounts payable …………………….. 3,370,300
12. Tax anticipation notes payable ………. 400,000
Expenditures control …………………… 16,000
Cash …………………………………………… 416,000
13. Due from state government ……………… 312,000
Revenues control …………………………….. 312,000
14. Expenditures control ………. 358,200
Due to other funds ………………. 358,200
Due to other funds ………….. 300,000
Cash …………………………….300,000
15. Due from state government ……….. 42,000
Revenues control …………………… 42,000
16. Accounts payable …………………..… 3,007,000
Due to federal government ………..…. 1,212,000
Due to state government …………….…. 33,000
Other financing uses – transfer out …….1,662,000
Cash …………………………………………… 5,914,000
17. Estimated revenues control ……… 203,000
Budgetary fund balance …………. 9,000
Appropriations control ……………….. 212,000
18. Estimated uncollectible taxes ………. 83,200
Taxes receivable ……………………….. 83,200
Estimated uncollectible interest & penalties …….. 400
Interest and Penalties receivable ………………… 400
19. Interest and Penalties Recevable ……… 13,000
Estimated uncollectible interest & penalties …. 1,100
Revenues control ………………………………. 11,900
20. Revenues control ………… 26,000
Deferred Revenues-property taxes …. 26,000
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