Chapter 4 Case Study (1)

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Reedley College *

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Jun 10, 2024

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Chapter 4 Case Study Required: Book journal entries for the following transactions in both the General Fund ledger and Government-Wide/Governmental Activities ledger. 1. The budget FY 2024 for the Town of Susanville authorizes expenditures of $3,700,000 allocated to the following: General Government $600,000, Public Safety $1,340,000, Public Works $1,200,000, Health and Welfare $430,000, Culture and Recreation $100,000 and Miscellaneous $30,000. Forecasted revenues of $3,980,000 were authorized and allocated to the following functions/programs: Property Taxes $2,520,000, Interest and Penalties on Delinquent Taxes $20,000, Sales taxes $550,000, Licenses and Permits $305,000, Fines and Forfeits $260,000, Intergovernmental Revenue, $170,000, Charges for Services $130,000 and Miscellaneous Revenues $25,000 for FY 2024. The entry to record the budget is: General Fund: Estimated Revenues 3,980,000 Budgetary FB 208,000 Appropriations 3,700,000 Governmental Activities: N/A 2. The Town of Susanville placed purchase orders for supplies totaling $65,150 for the following programs: General Government $26,000, Public Works $19,500, Health and Welfare $12,000, Culture & Recreation $7,650. The entry to record this transaction would be: General Fund: Encumbrances – 2024 65,150 Encumbrances outstanding - 2024 65,150 Governmental Activities: N/A
3. Assume that only a portion of the supplies was filled and completed during the year at an actual cost of $32,500, for which the estimated cost had been $33,750. The breakdown of the estimated costs is as follows for the portion of the goods that came in is as follows: General Government $21,000, Public Works $9,500, Health and Welfare $1,000 and Culture and Recreation $2,250. The allocation to function/program for actual costs is as follows: General Government $20,800, Public Works $9,200, Health and Welfare $700, and Culture and Recreation $1,800. The Town of Susanville received the invoice for the goods but has yet to pay for them. General Fund: Encumbrances outstanding – 2024 33,750 Vouchers Payable 33,750 Expenditures – 2024 32,500 Vouchers payable 32,500 Governmental Activities: Expenses – General Gov. 20,800 Expenses – Public works 9,200 Expenses – Health & Well 400 Expenses – Culture & Rec 1,800 Vouchers payable 32,500 4. In addition to supplies, the police department authorized the purchase of a new copier. It was ordered with an estimated cost of $30,000. General Fund: Encumbrances – 2024 30,000 Encumbrances Outstanding – 2024 30,000 Governmental Activities: N/A 5. The copier was received at an actual cost of $29,750 and the government has yet to pay the invoice. The copier qualifies as a long-lived asset according to the government’s capitalization policy. General Fund: Encumbrances outstanding – 2024 30,000 Encumbrances – 2024 30,000 Expenditures – 2024 29,750 Vouchers Payable 29,750
Governmental Activities: Equipment 29,750 Vouchers Payable 29,750 6. Bills were paid in the amount of $62,250 to pay the outstanding liability account Vouchers Payable. General Fund: Expenditures – 2024 62,250 Vouchers payable 62,250 Governmental Activities: 7. For FY 2024, the City of Susanville sends out property tax invoices based on required tax revenue of $2,600,000, and it is estimated that 4% will be uncollectible. General Fund: Tax receivable – current 2,600,000 Allowance for tax Rec – current 104,000 Revenues 2,496,000 Governmental Activities: Tax receivable – current 2,600,000 Allowance for tax Rec – current 104,000 Revenues 2,496,000 8. The City of Susanville collected $2,042,033 of current property taxes. General Fund: Cash 2,042,033 Tax Receivable – Current 2,042,033
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Governmental Activities: Cash 2,042,033 Tax Receivable – Current 2,042,033 9. The city’s accountant reclassifies uncollected current taxes to a delinquent status at year-end. General Fund: Delinquent Taxes Receivable ? Current tax receivables ? Governmental Activities: Delinquent Taxes Receivable ? Current tax receivables ? 10. Historically, the Town of Susanville does not collect a significant amount of delinquent taxes early in the following year and does not expect to collect delinquent property taxes within 60 days of year-end. The city’s accountant reclassified the outstanding property tax revenue as a deferred inflow of resources. General Fund: Don’t know how to Governmental Activities: Don’t know how to 11. The city’s accountant accrued interest and penalties of $12,200, of which they expect to collect $9,750 of that amount. General Fund: Interest and Penalty 12,200 Allowances for interest and penalty 2,450 Revenues 9,750
Governmental Activities: Interest and Penalty 12,200 Allowances for interest and penalty 2,450 Revenues 9,750 12. The City of Susanville collected property taxes from delinquent taxpayers in the amount of $106,520, of which $10,400 was accrued for interest and penalties General Fund: Cash 116,920 Delinquent Taxes Receivable 106,520 Revenues 10,400 Governmental Activities: Cash 116,920 Delinquent Taxes Receivable 106,520 Revenues 10,400 13. The treasurer of the City of Susanville received approval to write off delinquent taxes totaling $18,600 and related interest and penalties of $2,500. General Fund: Property tax receivable 18,600 Accrued interest and penalties 2,500 Allowance for uncollectable taxes 20,200 Governmental Activities: Property tax receivable 18,600 Accrued interest and penalties 2,500 Allowance for uncollectable taxes 20,200 14. The City of Susanville collected revenues from the following sources in 2024: Sales Tax $545,800, Fines and Forfeits assessed by Public Safety $255,000, fines and forfeits assessed by Public Works $250,000, Licenses and Permits assessed by the General Government $100,000, Charges for Services received by Culture and Recreation $107,000 and Miscellaneous revenue of $10,200.
General Fund: Cash 1,268,000 Revenue 1,268,000 Governmental Activities: Sales Tax 545,800 Fines Public safety 255,000 Fines Public works 250,000 Licenses and permits assessed by general Gov. 100,000 Charges for service received by culture & rec 107,000 Miscellaneous revenue 10,200 Revenue 1,268,000 15. The City of Susanville recorded expenditures of $3,616,000 relating to the operations of the government and allocated to the following functions and programs in 2024: General Government $579,000, Public Safety $1,310,000, Public Works $1,190,000, Health and Welfare $429,000, Culture and Recreation $98,000 and Miscellaneous $10,000. General Fund: Expenditures -2024 3,616,000 Vouchers Payable 3,616,000 Governmental Activities: General Government 579,000 Public Safety 1,310,000 Public Works 1,190,000 Health and Welfare 429,000 Culture and Recreation 98,000 Miscellaneous 10,000 Vouchers Payable 3,616,000 16. At year-end, all temporary accounts, both budgetary and opening were closed to the appropriate fund balance. (General Fund only) General Fund:
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17. Upon inspection, the accountant determined that there are two constrained revenues unspent at the end of fiscal 2024: $22,900 of sales taxes committed for constructing a hiking trail (in the Culture and Recreation program), and $33,500 of General Fund resources that the town manager has assigned for acquisition and installation of downtown security cameras. ( General Fund only) General Fund: