Background on the budget for the general fund: As with most governmental funds this cycle starts with budget information.A total of $1,044,500 is budgeted for revenues, including estimated collections in these categories:
taxes 1000000 permits 2000 intergovernmental 40000 fees 2000 fines 500 total 1044500A total of $1,040,000 is appropriated for expenditures or transfers out. These include:
general government 190000 safety 350000 transportation 100000 sanitation 200000 welfare 100000 recreation 75000 other 13500 transfer to pension 9500 transfer to debt service 2000 total 1040000
Hint: The general form, assuming a surplus or positive fund balance, would be:
dr cr
estimated revenues $
appropriations $
transfers out $
budget fund balance $
Give the specific entry
Answer for question 1.
2.a. The general fund accrues all $1,000,000 of taxes
general fund dr cr
taxes receivable ?
? ?
2.b. One half of the taxes are collected
general fund
? 500000
taxes receivable ?
2.c. One half of the money is spent (in cash) for general goverment. Give the entry and fund
name.
fund name ?
general government expenditure 95000
? ?
2.d. The reminder of the taxes are collected.
fund ?
? 500000
? ?
2.e. All of the intergovernmental revenue is collected in cash.
fund ? dr cr
? ?
? ?
2.f. All the other revenues are collected as estimated for the
general fundWhat is the journal entry?
Supplies for recreation were ordered in the amount of $50,000. Use the
encumbrance procedure and assume that the bill for the supplies arrived
and was exactly equal to $50,000.
2.g.Name the fund and give the journal entry for the encumbrance?
2.h. What is the journal entry for the voucher payable and the payment?
2.i. Recreation salaries amounting to $25,000
were accrued. Of the amount 0.075 was withheld for
social security tax (FICA). Identify the fund name and do the journal entry.
Hint on format: dr cr
fund name ?
Salary expenditures ?
Fica payable ?
salary payable ?
salary payable ?
Fica payable ?
cash ?
2.i. The other half of the money is spent (in cash) for general goverment;
it comes to $95,000. Give the fund and entry.What fund? What is the journal entry for this transaction?
2.l. The category of expenditures called other was made. What's the
fund? Make the journal entry too.
2.m and n. The transfer was made to the pension fund -- $9,500. Record the transaction for both ledgers, general and pension.
2.m. general fund Jounral entry? 2.n. pension fund Jounral entry?2. o and p. The transfer was made to the debt service fund -- 2000
Record the transaction for both ledgers, general and debt service.
2.o. fund ? Jounral entry?
2.p. debt service fund Jounral entry?2.r and s. The capital project fund borrows the money for road repair -- $50,000
Record all entries, including those for the capital project fund and general long term debt account group. Interest is not payable until next year so there is no need to accrue it and thus no need to journalize it.
2.r. For the capital project fund what is the entry?
2.s. For the general long term debt account group what is the journal entry?
2.t and u.. The capital project expends the money for the road repairs.
Record all entries, capital project and general fixed asset
account group.
2.t. fund ?
road repair expenditure 50000
cash ?
2.u. What is the entry for the general fixed asset account group?
Account dr cr
? ?
? ?
For the answers for questions 2. a to 2. u use this button.
1. What journal entry is needed to enter the budget into the budget accounts?Hint: The general form, assuming a surplus or positive fund balance, would be:
estimated revenues $ appropriations $ transfers out $ budget fund balance $Give the specific entry
answer: Budgetary entry for the general fund dr cr estimated revenues - taxes 1000000 estimated revenues - permits 2000 estimated revenues - intergovt 40000 estimated revenues - fees 2000 estimated revenues - fines 500 appropriations - general govt 190000 appropriations - safety 350000 appropriations - transport 100000 appropriations - sanitation 200000 appropriations - welfare 100000 appropriations - recreation 75000 appropriations - other 13500 transfer out - pension 9500 transfer out - debt service 2000 budget fund balance 4500This journal entry provides the details for each category instead of placing the details in subsidary ledgers. This practice of giving the details for budget entries is followed throughout the text. A subsidary approach would simply have the total for estimated revenue, for example, and then place the details in the subsidary ledgers.
Answers to Question 2
Do the journal entries for these transactions, noting whether the entry is for the general fund, capital projects, general fixed assets account group, or general long term debt account group.
2.a. The general fund accrues all 1000000 of taxes fund name ? dr cr taxes receivable ? ? ? answer: general fund dr cr taxes receivable 1000000 revenue - taxes 1000000A receivable is an asset and in this case it is increased, thus a debit; revenues constitute fund balance. Here revenues are increased, so it needs to be a credit, remembering that an increase in fund balance results in a credit.2.b. One half of the taxes are collected general fund
? 500000 taxes receivable ? answer: general fund cash 500000 taxes receivable 500000The asset cash is increased resulting in a debit. The asset taxes receivable is decreased resulting in a credit.2.c. One half of the money is spent (in cash) for general goverment
fund name ? general government expenditure 95000 ? ? answer: general fund general government expenditure 95000 Cash 95000Expenditures decrease fund balance which are presented with a debit. Here cash, an asset, is reduce, presented by a credit.2.d. The reminder of the taxes are collected
fund ? ? 500000 ? ? answer: general fund cash 500000 taxes receivable 500000Recall that all the receivables were recognized or accrued with the initial entry. Then one half was collect, now the other half is collected.2.e. All of the intergovernmental revenue is collected in cash.
fund ? ? ? ? ? answer: general fund cash 40000 revenue - intergovt 40000In this case the intergovernment revenue is not accrued as a receivable with a credit to deferred revenue. Assume it is the type of intergovernmental revenue that must be received to be recorded. Intergovernmental revenues differ in the way they are handled -- some are accrued as receivables but must be considered deferred revenue until the money is actually spent for a designated purpose. Then the jurisdiction bills the higher level of government, receives the money and recognizes a revenue. Other intergovermental revenue can be recognized as soon as the money is received. In this case revenue is recognized when the cash is received.2.f. All the other revenues are collected as estimated.
general fund What is the journal entry? answer: general fund cash 4500 revenue - permits 2000 revenue - fees 2000 revenue - fines 5002.g. Supplies for recreation were order in the amount of 500000 Use the encumbrance procedure and assume that the bill for the supplies arrived and was exactly equal to 500000fund ?
What is the journal entry for the encumbrance?
answer: general fund encumbrance - supplies 500000 reserve for encumbrance 500000When the supplies are order, this is the initial entry.reserve for encumbrance 500000 encumbrance - supplies 500000When the supplies and an invoice (bill) are received the the encumbrance entry for the puchase order is reversed in in the orginial amount encumbered regardless of the amount of the bill.2.h. What is the journal entry for the voucher payable and the payment?
recreaction supplies expend 500000 vouchers payable 500000 vouchers payable 500000 cash 500000 The bill is paid.2.i. Recreation salaries amounting to 25000 were accrued. Of the amount 0.075 was withheld for social security tax (FICA)hint: fund name ? Salary expenditures ? Fica payable ? salary payable ? salary payable ? Fica payable ? cash ? answer: Salary expenditures 25000 Fica payable 1875 salary payable 23125The salary expenditure is the gross amount and the payable the net amount. The Fica payable is a deduction from the gross amount.salary payable 25000 Fica payable 1875 cash 23125 The liabilities or payables are paid in cash.2.j. The other half of the money is spent (in cash) for general goverment; it comes to 95000fund ? What is the journal entry for this transaction? answer: general govt expenditure 95000 cash 950002.k. All the safety, transportation, sanitation, and welfare expenditures were made.general fund Give the journal entry for this transaction. answer: safety expenditure 350000 transportation expenditure 100000 sanitation expenditure 200000 welfare expenditure 100000 cash 7500002.l. The category of expenditures called other was made.fund ?
Make the journal entry. answer: general fund other expenditure 13500 cash 135002.m and n.The transfer was made to the pension fund -- 9500 2.m.Record the transaction for both ledgers, general and pension.general fund Jounral entry? answer: transfer to pension fund 9500 cash 9500The transfer is often called operating transfer and sometimes journalized as other financinng sources (uses) -- operating transfer.2.n. pension fund Jounral entry? answer: cash 9500 transfer from general fund 9500The transfer affect fund balance and thus when there is a transfer out it is debited to show a decrease in fund balance and when there is a transfer in, there is a credit to show an increase.2.o and p. The transfer was made to the debt service fund -- 2000
2.o. Record the transaction for both ledgers, general and debt service. fund ?
Jounral entry? answer: general fund transfer to debt service 2000 cash 20002.p. debt service fundJounral entry? answer cash 2000 transfer from general fund 20002.r and s. The capital project fund borrows the money for road repair -- 500002.r. Record all entries, including those for the capital project fund and general long term debt account group. Interest is not payable until next year so there is no need to accrue it and thus no need to journalize it.
capital project fund What is the entry? answer cash 50000 bond proceeds 50000For governmental fund bond proceeds actually increase fund balance, ie, they are consider an inflow of money to to the governmental fund. Thus, bond proceeds are a credit to indicate an increase in fund balance. The term other financing sources -- bond proceeds in sometimes used.2.s. general long term debt account group
Journal entry? amount to be provided 50000 bonds payable 50000Recall that account groups do not have any real assets. The amount to be provided is simply the full faith and credit of the jurisdiction. In other words, it is future taxes or borrowing that stands behind the debt (in this case bond payable) to be paid.2.t and u.The capital project expends the money for the road repair.
2.t. Record all entries, capital project and general fixed asset account group.
fund ? road repair expenditure 50000 cash ? answer: road improvement expenditures 50000 cash 50000In governmental funds, the entire capital amount is considered expended when paid. Governmental funds do not depreciate capital or major fixed assets.2.u. general fixed asset account group
? ? ? ? answer: road improvements 50,000 Investment from capital project fund 50,000The asset that was paid for by the capital project fund is recorded in the general fixed asset account group. The asset is debited and the source is given as a credit.Answers to question 3
What would the closing entries be for the general fund and only the general fund? Ignore closing entries for all other funds.answer: close the budget entries appropriations - general govt 190000 appropriations - safety 350000 appropriations - transport 100000 appropriations - sanitation 200000 appropriations - welfare 100000 appropriations - recreation 75000 appropriations - other 13500 transfer out - pension 9500 transfer out - debt service 2000 budget fund balance 4500 estimated revenues - taxes 1000000 estimated revenues - permits 2000 estimated revenues - intergovt 40000 estimated revenues - fees 2000 estimated revenues - fines 500 close the actual revenue, expenditures, and other sources and uses revenue - taxes 1000000 revenue - permits 2000 revenue - intergovt 40000 revenue - fees 2000 revenue - fines 500 expenditures - general govt 190000 expenditures - safety 350000 expenditures - transport 100000 expenditures - sanitation 200000 expenditures - welfare 100000 expenditures - recreation 75000 expenditures - other 13500 transfer to pension 9500 transfer to debt service 2000 fund balance 4500Return to question three