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.
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.
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
$344,000
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,