Jeter AA 4e SolutionsManual Ch17

17 - 1

CHAPTER 17

ANSWERS TO QUESTIONS

1. The performance of services by nonbusiness organizations is based on social need rather than on the profit motive and there is no conscious or deliberate effort by such organizations to derive a

profit from their operations.

Nonbusiness organizations are not operated for the financial benefit of a specific individual or

group of individuals and those who contribute resources to nonbusiness organizations do not

necessarily benefit proportionately or at all from the services provided by such organizations.

There is no proprietary interest in nonbusiness organizations and the equity interest in the net assets

of such organizations cannot be sold or exchanged.

2. A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources together with all related liabilities and residual equities or balances, and

changes therein, which are segregated for the purpose of carrying on specific activities or attaining

certain objectives in accordance with special regulations, restrictions, or limitations.

3. At any particular point in time the unreserved fund balance of an expendable fund entity represents the balance of financial resources that are available for expenditure for the specified purposes or

objectives for which the fund was created.

4. Major classifications of increases in expendable fund resources are revenues, debt issue proceeds and transfers from other funds. Decreases in expendable fund resources are classified as

expenditures or as transfers to other funds.

5. In accounting for expendable funds entities revenue is recognized when (1) it can be objectively measured and (2) it is available to finance expenditures of the current period. In contrast, in

accounting for profit-oriented enterprises revenue is ordinarily not recognized until (1) it can be

objectively measured and (2) the earnings process is complete or substantially complete.

6. Municipality:

Functions Public Safety Activity Vice Control Organization Unit Police Department Object Travel

Functional and activity classifications are recommended for external financial reporting.

7. An appropriation is an authorization enacted by a legislative body or granted by a governing board to make expenditures for a specified purpose.

An encumbrance is an obligation in the form of a purchase order or other commitment that reduces

appropriation authority and is formally recorded in the accounting records.

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17 - 2

An expenditure is a decrease in the net financial resources of a fund entity incurred to carry out the

activities or objectives of the fund.

A disbursement represents the payment of cash for an expenditure. Such payments may precede the

expenditure (an advance), coincide with the expenditure (a direct payment), or follow the

expenditure (the payment of a liability).

8. An expense is associated with accounting for profit oriented enterprises or proprietary funds and may be defined as an expired cost consumed in the production of revenue. An expenditure is

associated with accounting for expendable funds entities and is a decrease in the net financial

resources of a fund entity incurred to carry out the activities or objectives of the fund.

9. In accounting for commercial activities, estimated uncollectible receivables are treated as an expense in the determination of net income. In accounting for expendable fund entities, estimated

uncollectible taxes are treated as a direct reduction of revenue in the determination of the inflow of

financial resources. The estimate of uncollectible taxes is treated as a direct reduction of revenue

rather than as an expenditure since the failure to collect taxes is not an outflow of financial

resources but rather is a reduction in the inflow of financial resources. Since there is no

appropriation for the amount of estimated uncollectible taxes, it is properly accounted for as a

reduction of revenue rather than as an expenditure.

10. Since the amount of an appropriation cannot be legally exceeded, the placing of purchase orders and the signing of contracts are critical events in controlling the expenditures of expendable fund

entities. The financial resources of a fund are said to be encumbered when a transaction is entered

into that requires performance on the part of another party before the nonprofit entity becomes

liable to perform (expend financial resources) its part of the transaction. Encumbrance accounting

formally records the reduction of appropriation authority resulting from purchase orders and similar

commitments and thus serves to provide an accounting safeguard against the expenditure of

financial resources in excess of appropriations.

There would be no reason to prevent a commercial enterprise from using encumbrance accounting

so long as the balance in reserve for encumbrances was offset by the balance in the encumbrances

account for reporting purposes. However, the compelling need for encumbrance accounting arising

from the penalties provided by law for government administrators who expend funds in excess of

those appropriated is not a factor in the operation and administration of commercial enterprises.

11. The balance in the Reserve for Encumbrances account is not a liability. Rather it represents the estimated amount of net financial resources of the fund entity that will be needed in the subsequent

year to liquidate obligations entered into under the authority of the current years appropriation. As such it represents a restriction on the availability of fund resources for future appropriation rather

than a liability and is properly reported in the financial statements as a portion (reserved) of the

total fund balance.

12. There should be columns for the following balances: Appropriations, Encumbrances, Expenditures, Total Encumbrances and Expenditures, and Unencumbered Balance.

13. Assets acquired with the resources of an expendable fund entity do not represent expendable financial resources but rather reflect the purposes for which the financial resources have been used.

Thus, they are recorded and reported as expenditures of, rather than as assets of, the expendable


17 - 3

fund entity. Depreciation is not accounted for in the records of an expendable fund entity for the

same reasons that fixed assets are excluded from the records of such entities. Expenditures, not

expenses, are measured in fund accounting.

Acquisitions of fixed assets require the use of financial resources and are accounted for as

expenditures. Depreciation of such assets is not a use of the financial resources of an expendable

fund entity and thus is not properly recorded in the accounts of such entities. Inclusion of

depreciation expense in the operating statement of an expendable fund entity would confuse two

fundamentally different measurements - expenditures and expenses.

14. The adoption of a budget for a general fund is a legislative process that is highly formalized and which results in the formal recording of the budgeted amounts (appropriations) within the

framework of the double entry accounting system. The adoption of a budget by a commercial unit

is also a planning and control device, but the adoption process and the subsequent application of the

budget is seldom as formalized or as rigid as it is in governmental accounting.

15. There are two principal financial statements recommended for expendable fund entities: (1) a Comparative Balance Sheet and (2) a Comparative Statement of Revenue, Expenditures and Other

Changes in Fund Balance. These two statements may be accompanied by schedules that present

detailed financial data which support and amplify the information summarized in the formal

financial statements. Supporting schedules may also be used to present budgetary data or to

demonstrate compliance with legal provisions.

16. In order to determine the total cost of performing a particular function or activity, the total expenditures for such functions or activities would have to be adjusted by reducing the amount of

capital expenditures included therein and by adding depreciation expenses relating to the

dissipation of services embodied in capital assets utilized to support the function or activity. Since

capital acquisitions are not distinguished from other expenditures in the records of expendable fund

entities and since depreciation is not calculated within the framework of the records of expendable

fund entities there may be no reasonable basis for determining the amount or classification of these

adjustments.

Business Ethics

Business ethics solutions are merely suggestions of points to address. The objective is to raise the

students' awareness of the topics, and to invite discussion. In most cases, there is clear room for

disagreement or conflicting viewpoints.

Issues to be considered: If pricing is a function of cost, then businesses charging excessive prices can

be viewed as following excessive, even obscene pricing strategies. Also, there are others visiting the

city who are not attending the football game and who might adversely affected (for example,

individuals with medical emergencies, ill family members, etc.). On the other hand, the goal of

business is to make a profit and take advantage of market opportunities. As long as people are aware of

the practices, many might argue that the pricing strategy is appropriate.

Answers to Analyzing Financial Statements

AFS 17-1 1. Assets and liabilities are not classified by current and non-current, because government funds present

current financial resources. In addition, the typical for-profit balance sheet equation is assets equal

liabilities plus equity. In the non-profit statement, Assets equal liabilities plus fund balances.


17 - 4

2. The largest asset is Investments. This may seem surprising, but in the general fund capital assets are

not recorded.

3. The reserve for encumbrances represents the portion of the funds set aside to pay for goods not yet

received and services not yet contracted for prior to year-end.

AFS 17-2

1. The statement of Revenues, Expenditures, and Changes in Fund Balances focuses on the inflows and

outflows of current financial resources and come into and leave from the government. When a capital

asset is purchased, the entire cost is recognized in the governments fund (whereas on a for-profit statement the cost is capitalized and depreciation over its useful life). Similarly, when a government

repays debt, both the interest and principal payments are reflected on the statement. On a for-profit

income statement, only interest is recognized as an expense.

2. The largest expenditure in the general fund is for police.

3. The largest source of revenue is from property taxes.

4. When the general fund revenues, expenditures, and other financing sources are added together, the

general fund increased by $39,777. Of this amount, $10,851 was transferred in from other parts of the

government.

ANSWERS TO EXERCISES

Exercise 17-1

1. Cash

Revenue

15,000

15,000

2. Cash

Revenue

100,000

100,000

3. Encumbrances

Reserve for Encumbrances

130,000

130,000

4. Cash

Bond Issue Proceeds

500,000

500,000


17 - 5

Exercise 171 (continued)

5. Cash

Revenue

250,000

250,000

6. Expenditures

Vouchers Payable


Encumbrances

140,000

130,000

140,000

130,000

Exercise 172

1. Estimated Revenues

Appropriations

Unreserved Fund Balance

4,000,000

3,800,000

200,000

2.

Property Tax Receivable

Estimated Uncollectible Property Tax

Revenue

3,000,000

120,000

2,880,000

3.

Due From State

Revenue

500,000

500,000

4.

Encumbrances


250,000

250,000

5.

Expenditures

Vouchers Payable


Encumbrances

Vouchers Payable

Cash

250,000

250,000

250,000

250,000

250,000

250,000

6. Expenditures

Cash

36,000

36,000

7.

Cash


2,050,000

2,050,000


17 - 6

Exercise 173

1. Estimated Revenues

Appropriations


1,950,000

1,800,000

150,000

2.


Estimated Uncollectible Property Tax

Revenue

1,150,000

35,000

1,115,000

3.

Cash


1,080,000

1,080,000

4.

Expenditures

Cash

Cash

Revenue

200,000

24,000

200,000

24,000

5. Encumbrances


96,000

96,000

6.

Expenditures

Contracts Payable


Encumbrances

8,000

8,000

8,000

8,000

7. Contracts Payable

Cash

8,000

8,000


17 - 7

Exercise 174

1. Revenue

Estimated Revenue


3,210,000

3,110,000

100,000

2.

Appropriations

Expenditures

Encumbrances


2,700,000

1,960,000

734,000

6,000

3.

Reserve for Encumbrances 2008 Unreserved Fund Balance

Expenditures 2008

50,000

5,000

55,000

4.

Transfers From Other Funds


Transfers to Other Funds

40,000

50,000

90,000

Exercise 175

1. Revenue


Estimated Revenue

1,675,000

15,000

1,690,000

2.

Appropriations

Expenditures

Encumbrances


1,550,000

1,310,000

165,000

75,000

3.

Reserve for Encumbrances 2007 Expenditures 2007 Unreserved Fund Balance

35,000

32,000

3,000

Exercise 176

Part A Inventory

Reserve for Supplies Inventory

65,000

65,000

Part B $350,000


17 - 8

Exercise 177

Part A Expenditures

Cash

Inventory


225,000

5,000

225,000

5,000

Part B Expenditures

Cash

Inventory

Expenditures



225,000

5,000

5,000

225,000

5,000

5,000

Part C


1/1/ Balance

Purchase of Supplies

Use of Supplies

Setting up of Reserve

12/31/ Balance

Purchases

$555,000

(225,000)

________

$330,000

Consumption

$555,000

(220,000)

(5,000)

$330,000

Exercise 178

1. Estimated Revenue

Appropriations


1,900,000

1,850,000

50,000

2. Property Tax Receivable Estimated Uncollectible Property Taxes (5%) Revenue

955,000 47,750

907,250

3.

Encumbrances Reserve for Encumbrances

16,400 16,400

4. Encumbrances Reserve for Encumbrances

140,000 140,000

5. Expenditures

Cash

90,000 90,000


17 - 9

Exercise 178 (continued) 6. Due from State

Revenue 375,000

375,000

7. Expenditures Vouchers Payable

Reserve for Encumbrances Encumbrances

135,000

137,000

135,000

137,000


Reserve for Encumbrances Encumbrances

16,200

16,400

16,200

16,400

9. Cash Property Tax Receivable

450,000 450,000

10.

Vouchers Payable ($135,000 + $16,200) Cash

151,200

151,200

11. Reserve for Encumbrances Encumbrances

650 650

Exercise 179 1. Estimated Revenue

Unreserved Fund Balance Appropriations

To record the approved operating budget.

565,000 15,000

580,000

2. Property Tax Receivable ($60,000,000/$100) Estimated Uncollectible Taxes (3%) Revenue

To record tax levy

600,000 18,000

582,000

3.

Encumbrances


To record purchase order for motorcycle

4,200

4,200

4. Expenditures ($4,200 + $425)

Vouchers Payable


Encumbrances

To record liability for motorcycle received and to remove

the encumbrance

4,625

4,200

4,625

4,200


17 - 10

Exercise 179 (continued) 5. Expenditures

Cash

To record payment of payroll (an unencumbered

expenditure).

20,000

20,000

6. Cash

Revenue

To record receipt of proceeds from sale of equipment

8,225

8,225

7. Cash


To record property tax receipts

540,000

540,000

Exercise 1710

1. d 2. a 3. d 4. b 5. d 6. c 7. c


17 - 11

ANSWERS TO PROBLEMS Problem 171 Part A 1.

Estimated Revenue

Appropriations Unreserved Fund Balance

Due from Water Fund

Transfer from Water Fund Transfer to Debt Service Fund

Due to Debt Service Fund

1,560,000

50,000

80,000

1,400,000

160,000

50,000

80,000

2. Property Tax Receivable ($11,000,000 .10) Revenue Allowance for Uncollectible Taxes (2%)

1,100,000 1,078,000

22,000

3. Encumbrances

Reserve for Encumbrances 1,150,000

1,150,000

4. Expenditures 2007 Vouchers Payable

29,000

29,000

5. Due to Debt Service Fund

Cash

80,000 80,000



Encumbrances

1,155,000

1,150,000

1,155,000

1,150,000

7. Cash Due from Water Fund

50,000 50,000

8. Cash Property Tax Receivable

1,050,000 1,050,000

9. Allowance for Uncollectible Taxes


17,000 17,000

10. Vouchers Payable ($29,000 + $1,155,000) Cash

1,184,000

1,184,000

11. Cash Revenue

455,000 455,000

12. Encumbrances (2 x $120,000) Reserve for Encumbrances

240,000 240,000


17 - 12

Problem 17-1 (continued)

Part B CITY OF BEDFORD

General Fund Preclosing Trial Balance

December 31, 2008 Cash Property Tax Receivable Encumbrances Estimated Revenue Transfer to Debt Service Fund Expenditures 2007 Expenditures Allowance for Uncollectible Taxes Unreserved Fund Balance Reserve for Encumbrances 2007 Reserve for Encumbrances Revenue Appropriations Transfer from Water Fund

Total

Debit $391,000 108,000 240,000

1,560,000 80,000 29,000

1,155,000

_________ $3,563,000

Credit

$40,000 270,000 30,000

240,000 1,533,000 1,400,000

50,000 $3,563,000

Part C Closing Entries

1. Revenue Unreserved Fund Balance

Estimated Revenue

1,533,000 27,000

1,560,000

2. Appropriations Expenditures Encumbrances Unreserved Fund Balance

1,400,000 1,155,000

240,000 5,000

3. Transfer from Water Fund Unreserved Fund Balance

Transfer to Debt Service Fund

50,000 30,000

80,000

4. Reserve for Encumbrances - 2007 Expenditures - 2007 Unreserved Fund Balance

30,000 29,000 1,000


17 - 13

Problem 17-1 (continued) Part D CITY OF BEDFORD

General Fund Postclosing Trial Balance

December 31, 2008 Cash Property Tax Receivable Allowance for Uncollectible Taxes Unreserved Fund Balance ($270,000 - $27,000 + $5,000 - $30,000 + $1,000) Reserve for Encumbrances

Total

Debit $ 391,000

108,000

________ $ 499,000

Credit

$ 40,000 219,000

240,000 $ 499,000

Problem 172 Part A Unreserved Fund Balance per Trial Balance $24,000 Add Appropriations 672,000 Deduct Estimated Revenue (630,000) Unreserved Fund Balance on December 31, 2008

$66,000

Unreserved Fund Balance on December 31, 2008 (above) $66,000 Reserve for Encumbrances - December 31, 2008 42,000 Reserve for Supplies Inventory 72,000 Total Fund Balance - 12/31/2008

$180,000

Part B Adjusting and Closing Entries

Revenue Estimated Revenue Unreserved Fund Balance

696,000 630,000 66,000

Reserve for Supplies Inventory ($72,000 - $60,000) Supplies Inventory

12,000 12,000

Unreserved Fund Balance Reserve for Encumbrances

Expenditures - 2008

1,000 42,000

43,000

Appropriations Expenditures Encumbrances Unreserved Fund Balance

672,000 468,000 120,000 84,000

Part C Unreserved Fund Balance per Trial Balance

Closing Entries ($66,000 - $1,000 + $84,000)

Unreserved Fund Balance 12/31/2009



Fund Balance - 12/31/2009

$ 24,000

149,000

173,000

120,000

60,000

$353,000


17 - 14

Problem 173 Part A Closing Entries

1. Unreserved Fund Balance Revenue

Estimated Revenue

64,000 3,656,000

3,720,000


310,000 296,000 14,000


3,488,000 3,020,000

382,000 86,000

4. Transfers from Other Funds

Unreserved Fund Balance Transfers to Other Funds

300,000 220,000

520,000

Part B Budget entry on January 1, 2009 Estimated Revenues

Appropriations Unreserved Fund Balance

3,720,000 3,488,000

232,000

Unreserved fund balance per 12/31/2009 preclosing trial balance Less credit to unreserved fund balance on 1/1/2009 from budget entry Unreserved fund balance on 12/31/2008 Reserve for encumbrances 12/31/2008 Total fund balance per balance sheet 12/31/2008 Unreserved fund balance per 12/31/2009 pre-closing trial balance Closing entries ($14,000 + $86,000 - $64,000 - $220,000) Unreserved fund balance 12/31/2009 Reserve for encumbrances 12/31/2009 Total fund balance per balance sheet 12/31/2009

$ 422,000 232,000

190,000 310,000 $ 500,000

$422,000 (184,000)

238,000 382,000 $ 620,000

Part C Total fund balance 12/31/2008 $ 500,000 Add inflows of financial resources

Revenues Transfers from other funds

Deduct outflows of financial resources

Expenditures made this year against prior years appropriation authority Expenditures made this year against current years appropriation authority Transfers to other funds

Total fund balance 12/31/2009

$3,656,000 300,000

$296,000

3,020,000

520,000

3,956,000

(3,836,000) $ 620,000


17 - 15

Problem 174

Part A Journal Entries


Appropriations


Due from Trust Fund

Transfers from Other Funds


Due to Debt Service Fund

1,600,000

50,000

80,000

1,530,000

70,000

50,000

80,000

2. Property Tax Receivable

Estimated Uncollectible Taxes

Revenue

1,500,000

30,000

1,470,000

3. Encumbrances


1,400,000

1,400,000

4. Cash


1,450,000

1,450,000

5. Cash

Due from Trust Fund

50,000

50,000

6. Expenditures

Vouchers Payable


Encumbrances

1,380,000

1,360,000

1,380,000

1,360,000

7. Cash

Revenue

48,000

48,000

8. Vouchers Payable

Cash

1,300,000

1,300,000


Cash

80,000

80,000

10. Supplies Inventory


($100,000 - $75,000 = $25,000)

25,000

25,000


17 - 16


Part B CITY OF MONTE VISTA

The General Fund

Preclosing Trial Balance

December 31, 2009

Debits Credits

Cash



Supplies Inventory



Estimated Revenue

Appropriations



Revenue

Encumbrances


Expenditures

Vouchers Payable

Total

$468,000

50,000

100,000

1,600,000

80,000

40,000

1,380,000

_________

$3,718,000

1,518,000

$370,000

100,000

1,530,000

50,000

30,000

40,000

80,000

$3,718,000


1. Revenue


Estimated Revenue

1,518,000

82,000

1,600,000

2. Appropriations

Expenditures

Encumbrances


1,530,000

1,380,000

40,000

110,000

3. Transfers From Other Funds



50,000

30,000

80,000


17 - 17

Problem 17-4 (continued) Part D Financial Statements CITY OF MONTE VISTA

The General Fund Balance Sheet

December 31, 2009 Assets

Cash Supplies Inventory Property Tax Receivable Less Estimated Uncollectible Taxes

Total Liabilities and Fund Balance Vouchers Payable Fund Balance:

Unreserved ($370,000 - $82,000 + $110,000 - $30,000) Reserve for Encumbrances Reserve for Supplies Inventory

Total

$50,000 30,000

$368,000 40,000

100,000

$468,000 100,000

20,000 $588,000

80,000

508,000 $588,000

CITY OF MONTE VISTA

The General Fund Statement of Revenue, Expenditures and Changes in Fund Balance

For the Year Ended December 31, 2009

Revenue $1,518,000 Expenditures 1,380,000 Revenues over expenditures 138,000 Other Financing Sources (uses) Transfers From Other Funds 50,000 Transfers to Other Funds (80,000) (30,000) Increase in Supplies Inventory 25,000 Increase in Fund Balance 133,000 Fund Balance 1/1/ ($300,000 + $75,000) 375,000 Fund Balance 12/31 $ 508,000


17 - 18

Problem 175 Part A Journal Entries

1. Estimated Revenue Appropriations Unreserved Fund Balance

735,000 700,000 35,000

2. Property Tax Receivable Estimated Uncollectible Taxes Revenue

590,000 24,000

566,000

3. Cash

Revenue

35,000

35,000

4. Cash

Revenue

110,000

110,000

5. Encumbrances


642,500

642,500

6. Expenditures

Vouchers Payable


Encumbrances

455,000

470,000

455,000

470,000

7. Expenditures - 2008

Vouchers Payable

28,000

28,000

8. Cash


570,000

570,000

9. Vouchers Payable

Cash

475,000

475,000

10. Cash

Due from Trust Fund

50,000

50,000

11. Estimated Uncollectible Taxes


30,000

30,000


17 - 19


Part B CITY OF FAIRFIELD

The General Fund Preclosing Trial Balance

December 31, 2009

Cash Property Tax Receivable Estimated Uncollectible Taxes Vouchers Payable Reserve for Encumbrances 2008 Unreserve Fund Balance Estimated Revenue Appropriations Revenue Encumbrances Reserve for Encumbrances Expenditures Expenditures - 2008

Total

Debits $720,000

35,000

735,000

172,500

455,000 28,000 $2,145,500

Credits

$14,000 68,000 30,000

450,000

700,000 711,000

172,500

__

$2,145,500


1. Revenue Unreserved Fund Balance

Estimated Revenue

711,000 24,000

735,000


30,000 28,000 2,000


700,000 455,000 172,500 72,500


17 - 20


Part D CITY OF FAIRFIELD

The General Fund Balance Sheet

December 31, 2009

Assets Cash Property Tax Receivable Less Estimated Uncollectible Taxes Liabilities and Fund Balance Vouchers Payable Fund Balance

Unreserved ($450,000 - $24,000 + $2,000 + $72,500) Reserve for Encumbrances

Total

$35,000 14,000

$500,500 172,500

$720,000

21,000 $741,000

$68,000

673,000 $741,000

CITY OF FAIRFIELD

The General Fund

Statement of Revenue, Expenditures and Changes in Fund Balance For the Year Ended December 31, 2009

Revenue

Expenditures ($455,000 + $28,000) Excess of Revenue over Expenditures Fund Balance - January 1 ($415,000 + $30,000) Fund Balance - December 31

$711,000 483,000

228,000 445,000 $673,000


17 - 21

Problem 17-6

Part A HUNNINGTON TOWNSHIP

Statement of Revenues, Expenditures and

Changes in Fund Balance

For the Year Ended June 30, 2009

Revenue

Expenditures:

Current Years Appropriation Prior Years Appropriation

Total

Excess of Revenues over Expenditures

Sale of Equipment

Increase (Decrease) in Fund Balance

Fund Balance July 1, 2008

Fund Balance June 30, 2009

a $700,000 + $60,000 = $767,000

b $755,000 - $42,500 = $712,500

c Unreserved fund balance per trial balance

Add appropriations

Deduct estimated revenue (note 3)

Unreserved fund balance - July 1, 2008

Reserve for encumbrances - July 1, 2008

Fund Balance - July 1, 2008

d Unreserved fund balance per trial balance

Add revenue in excess of estimated revenue ($767,000 - $700,000)

Deduct expenditures and encumbrances in excess of appropriations

[($755,000 + $37,000) - $764,000]

Unreserved fund balance - June 30, 2009

Reserve for encumbrances

Fund Balance - June 30, 2009

$760,000a

712,500b

42,500

755,000

5,000

7,000

12,000

144,000c

$156,000d

$80,000

720,000

(700,000)

100,000

44,000

$144,000

$80,000

67,000

(28,000)

119,000

37,000

$156,000


17 - 22

Problem 17-6 (continued) Part B HUNNINGTON TOWNSHIP

The General Fund Balance Sheet June 30, 2009

Assets

Cash Property Tax Receivable Less Estimated Uncollectible Taxes Accounts Receivable Less Allowance for Uncollectible Accounts Due from Internal Service Fund

Total

Liabilities and Fund Balance Vouchers Payable Due to Enterprise Fund Fund Balance:

Unreserved Reserve for Encumbrances

Total

$107,000 18,000

40,000 4,000

$119,000 37,000

$11,000

89,000

36,000

50,000 $186,000

$20,000 10,000

156,000 $186,000


17 - 23

Problem 17-7

Part A Omitted

Part B General Journal Entries

1A. Estimated Revenue Appropriations Unreserved Fund Balance

2,268,000 2,225,000

43,000

1B. Due from Water and Sewer Fund Transfers From Other Funds

118,000 118,000

1C. Transfers to Other Funds Due to Debt Service Fund

55,000 55,000

2. Encumbrances Reserve for Encumbrances

1,202,000 1,202,000

3A. Reserve for Encumbrances Encumbrances

1,202,000 1,202,000

3B. Expenditures - 2007 Expenditures

Vouchers Payable

80,000 1,085,600

1,165,600

4. Encumbrances


78,000 78,000

5. Cash Revenue

92,500 92,500

6. Property Tax Receivable ($18,500,000 8%)

Revenue Allowance for Uncollectible Taxes (2%)

1,480,000 1,450,400

29,600

7. Cash Due from Federal Government

58,000 58,000


Cash 55,000

55,000

9. Accounts Receivable Revenue

155,675

155,675

10. Cash

Allowance for Uncollectible Taxes Property Tax Receivable

1,438,455 18,250

1,456,705

11. Expenditures Cash

998,765 998,765


17 - 24

Problem 17-7 (continued) 12.

Cash

Revenue

333,650

333,650

13. Cash Revenue ($98,682 + $130,000) Accounts Receivable Due from Water and Sewer Fund

495,402 228,682 148,720 118,000

14A. Expenditures

Voucher Payable

57,680 57,680

14B. Vouchers Payable Cash

57,680 57,680

15A. Reserve for Encumbrances Encumbrances

78,000 78,000

15B. Expenditures Vouchers Payable

79,280 79,280

15C. Vouchers Payable

Cash 79,280

79,280

16. Vouchers Payable Cash

1,207,100 1,207,100


17 - 25


Part C CITY OF ROSENBURG The General Fund Preclosing Trial Balance

1

December 31, 2008 Debit Credit

Cash Certificates of Deposit Accounts Receivable Supplies Inventory Estimated Revenue Property Taxes Receivable Allowance for Uncollectible Taxes Appropriations Vouchers Payable Transfer from Water and Sewer Fund Transfer to Debt Service Fund Unreserved Fund Balance Reserve for Inventory Reserve for Encumbrances - 2007 Expenditures Revenues Encumbrances Expenditures - 2007 Reserve for Encumbrances

$175,632 200,000 35,630 37,600

2,268,000 98,895

55,000

2,221,325

0 80,000

_________ $5,172,082

$43,500 2,225,000

139,500 118,000

269,075

37,600 78,500

2,260,907

0 $5,172,082

1 Before adjustment for inventory and accrued interest on certificates of deposit.

Part D Adjusting Entries

17a. Certificates of Deposit ($200,000)(.05) Revenues

10,000 10,000

17b. Inventory Reserve for Inventory ($38,250 - $37,600)

650 650


17 - 26


Part E Closing Entries

a. Revenue ($2,260,907 + $10,000) Estimated Revenue Unreserved Fund Balance

2,270,907 2,268,000

2,907

b. Appropriations Expenditures Unreserved Fund Balance

2,225,000 2,221,325

3,675

c. Reserve for Encumbrances - 2007 Unreserved Fund Balance

Expenditures 2007

78,500 1,500

80,000

d. Transfer from Other Funds

Transfer To Other Funds


118,000

55,000

63,000

Part F CITY OF ROSEBURG

The General Fund

Balance Sheet

December 31, 2008 and 2007

Asset 2008 2007 Cash

Certificates of Deposit

Accounts Receivable

Due from Federal Government

Property Taxes Receivable (Less Allowance for

Uncollectible Amounts, 2008 - $43,500; 2007 $32,150) Supplies Inventory

Total

Liabilities and Fund Balance

Vouchers Payable

Fund Balance:

Unreserved ($269,075 + $2,907 + $3,675 - $1,500 + $63,000)


Reserve for Inventory

Total Fund Balance

Total

$175,632

210,000

35,630

0

55,395

38,250

$514,907

$139,500

337,157

0

38,250

375,407

$514,907

$155,450

200,000

28,675

58,000

43,450

37,600

$523,175

$181,000

226,075

78,500

37,600

342,175

$523,175


17 - 27


Part G CITY OF ROSEBURG

Statement of Revenues, Expenditures and other Changes in Fund Balance

For the Year Ended December 31, 2008

Revenue $2,270,907

Expenditures

Excess of expenditures over revenues



Increase in Supplies Inventory

Increase in Fund Balance

Fund Balance 1/1

Fund Balance 12/31

2,301,325

(30,418)

118,000

(55,000)

650

33,232

342,175

$375,407


17 - 28

Problem 17-8 THE MADRAS SCHOOL DISTRICT

General Fund Transactions

July 1, 2008 through June 30, 2009

Debit Credit


Appropriations


3,000,000

2,980,000

20,000

To record the adoption of the budget for the year

2. Property Tax Receivable (given)

Revenue from Taxes


To record tax levy for year

2,870,000

2,800,000

70,000

3.



To record write-off of uncollectible taxes

40,000

40,000

4. Cash


Miscellaneous Revenue

To record cash collection during year

2,940,000

2,810,000

130,000

5. Encumbrances


2,700,000

2,700,000

To record encumbrances for current expenditures

6. Reserve for Encumbrances

Encumbrances

To reverse encumbrances

2,700,00

2,700,000

7.

Expenditures

Vouchers Payable

To record vouchers payable

2,700,000

2,700,000

8. Vouchers Payable

Cash

To record cash payments during year

2,640,000

2,640,000

9. Expenditures - Prior Year

Vouchers Payable

To record expenditures for prior year

58,000

58,000

10. Reserve for Encumbrances

Expenditures - Prior Year

Fund Balance

60,000

58,000

2,000

To close out excess reserve to fund balance


17 - 29


11. Due to Other Funds

Vouchers Payable

210,000

210,000

To record vouchers for payment to other funds

12. Expenditures

Due to Others Funds

142,000

142,000

To record expenditures for amounts due other funds

13.

Encumbrances


To record encumbrances for new contract

91,000

91,000


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