Calculation Based On Governmental And Not For Profit Entities

Q3. The city council of E. Staatsboro approved the following budget for the General Fund for fiscal year 2013: Estimated Revenues Property taxes.. $335,000 License fees... 40,000 Fines and penalties .15,000 Total revenues .$390,000 Appropriations Salaries. $350,000 Supplies and utilities. 30,000 Debt service. 3,000 Total appropriations.. 383,000 Budgeted Increase in Fund Balance $ 7,000 The post-closing trial balance for the fund, as of December 31, 2012, was as follows: Debits Credits Cash $ 15,000 $ 8,000 Vouchers payable 7,000 Fund balance (unassigned) $15,000 $15,000 The following transactions and events occurred during FY 2013: 1. Levied property taxes of $335,000 and mailed tax bills to property owners. 2. Borrowed $300,000 on tax anticipation notes at an interest rate of 1 percent per annum. 3. Ordered supplies expected to cost $18,000. 4. Received the supplies along with an invoice for $19,000; paid the invoice immediately. 5. Received cash ($383,000) from the following sources: property taxes ($330,000), licenses and fees ($38,000), fines and penalties ($15,000). 6. Paid cash for the following purposes: unpaid vouchers at the start of year ($8,000), salaries ($340,000), utility bills ($11,000). 7. Repaid the tax anticipation notes 6 months after the date of borrowing, with interest. 8. Processed a budgetary interchange, increasing the appropriation for supplies and utilities by $2,000 and reducing the appropriation for salaries by a like amount. 9. Will pay salaries for the last few days in December, amounting to $2,000, at the end of the first pay period in January 2014; also, received in early January 2014 a utilities invoice for $1,000 applicable to December 2013. Use the preceding information to do the following. a. Prepare journal entries to record the budget and the listed transactions and events. b. Prepare a pre-closing trial balance. c. Prepare a balance sheet; a statement of revenues, expenditures, and changes in fund balance. d. Prepare closing journal entries.

a. Journal Entries for Budget and Transactions

1. Budget (June 30, 2013):

Debit: Estimated Revenues: Property Taxes ($335,000), License Fees ($40,000), Fines and Penalties ($15,000) Credit: Appropriations: Salaries ($350,000), Supplies and Utilities ($30,000), Debt Service ($3,000)

2. Tax Anticipation Notes (July 1, 2013):

Debit: Cash ($300,000) Credit: Interfund Receivables - Taxes ($300,000)

3. Ordered Supplies (July 15, 2013):

Debit: Appropriations: Supplies and Utilities ($18,000) Credit: Encumbrances: Supplies and Utilities ($18,000)

4. Received Supplies (August 10, 2013):

Debit: Expenses: Supplies and Utilities ($19,000) Credit: Encumbrances: Supplies and Utilities ($18,000) Credit: Vouchers Payable ($19,000)

5. Received Cash (Throughout FY 2013):

Debit: Cash ($383,000) Credit: Due to Other Funds - Taxes ($330,000) Credit: Revenues: License Fees ($38,000) Credit: Revenues: Fines and Penalties ($15,000)

6. Paid Cash (Throughout FY 2013):

Debit: Vouchers Payable ($8,000) Debit: Expenses: Salaries ($340,000) Debit: Expenses: Utilities ($11,000) Credit: Cash ($359,000)

7. Repayment of Tax Anticipation Notes (January 1, 2014):

Debit: Interfund Receivables - Taxes ($300,000) Debit: Expenses: Interest on Short-Term Debt ($1,500) Credit: Due to Other Funds - Interest ($1,500) Credit: Cash ($301,500)

8. Budgetary Interchange (October 1, 2013):

Debit: Appropriations: Salaries ($2,000) Credit: Appropriations: Supplies and Utilities ($2,000)

Note: Journal entries 9a and 9b for December salaries and utilities should be made in January 2014 as they don't affect December 31, 2013.

b. Pre-Closing Trial Balance (December 31, 2013)

Debits

Credits

Cash

$ 25,500

$ 6,000

Vouchers Payable

19,000

Due to Other Funds - Taxes

300,000

Interfund Receivables - Taxes

Due to Other Funds - Interest

1,500

Encumbrances: Supplies and Utilities

(18,000)

Fund Balance (unassigned)

23,000

$344,000

c. Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance

Balance Sheet (December 31, 2013):

Assets

Cash

$25,500

Interfund Receivables - Taxes

300,000

Due to Other Funds - Interest

1,500

Total Assets

$327,000

Liabilities and Fund Balance

Vouchers Payable

19,000

Fund Balance (unassigned)

23,000

Total Liabilities and Fund Balance

$327,000

Statement of Revenues, Expenditures, and Changes in Fund Balance:

Revenues

Property Taxes

330,000

License Fees

38,000

Fines and Penalties

15,000

Total Revenues

383,000

Expenditures

Salaries

342,000

Supplies and Utilities

31,000

Interest on Short-Term Debt

1,500

Total Expenditures

374,500

Excess of Revenues over Expenditures

8,500

Fund Balance, Beginning of Year

15,000

Fund Balance, End of Year

23,

Sample Solution

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Calculation Based On Governmental And Not For Profit Entities

a. Journal Entries for Budget and Transactions

b. Pre-Closing Trial Balance (December 31, 2013)

c. Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance

Sample Solution

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