Chapter 11, Problem 41P

a.

To determine

Find the balance in the Budgetary Fund Balance account for the budget for the year.

Explanation of Solution

The balance in the Budgetary Fund Balance account for the budget for the year:

Particulars	Amount
Estimated Revenues	$       232,000
Appropriations	$     (225,000)
Budgetary Fund Balance	$           7,000

Table: (1)

The amount of appropriations is more than that of estimated revenues. Thus, the balance of fund is credit balance.

b.

To determine

Explain if the consumption method is being applied, how this is recorded.

Explanation of Solution

The amount which is currently being used is recorded as an asset under the consumption method. The 40% amount is not being used which will be transferred to the Fund Balance-Unassigned.

Computation of the amount of supplies being used currently:

$\begin{array}{c}\text{Currently}\text{used}\text{=}\text{Supplies}\text{×}\text{60\%}\\ =\$16,000\times 0.60\\ =\$9,600\end{array}$

c.

To determine

Identify the reporting which is made at the end of 2015.

Explanation of Solution

The truck is being purchased at the end of year due to which it will be delivered in the next year. Thus, the amount of encumbrances and the Fund Balance-Reserved for encumbrances will be eliminated from the reporting as there had been no transaction. Earlier the encumbrance was recorded in order to reserve the amount for specific purpose.

d.

To determine

Provide all necessary journal entries on that date.

Explanation of Solution

The journal entries as on December 31, 2107 are as follows:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
12/31/2017	Fund Balance-Reserved for encumbrances		$   111,000
	Encumbrances			$   111,000
	(being encumbrance removed)
	Expenditures Control		$   120,000
	Vouchers Payable			$   120,000
	(being expenditures control recorded)

Table: (2)

e.

To determine

Prepare all journal entries that should have been made when the $33,000 transfer was made for the eventual payment of a long-term debt.

Explanation of Solution

The journal entries that should have been made when the $33,000 transfer was made for the eventual payment of a long-term debt:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
12/31/2017	Other Financing Uses-Transfer Out		33,000
	Cash			33,000
	(being the other financing used recorded)
	Cash		33,000
	Other Financing Sources-Transfer in			33,000
	(being the other financing used recorded)

Table: (3)

f.

To determine

Find the amount of revenue which would be recognized for the period. Explain the composition of this total.

Explanation of Solution

The amount of revenue which would be recognized for the period:

Particulars	Amount
Property tax collected	$       190,000
Cash received from business licenses	$         14,000
Grant for ambulance drivers	$         24,000
Total revenues	$       228,000

Table: (4)

g.

To determine

Find the total expenditures. Explain the makeup of this total.

Explanation of Solution

Computation of the total expenditures:

Particulars	Amount
Paid salaries to police officers	$         21,000
Salaries paid to ambulance drivers	$         24,000
Equipment rental	$           3,000
Cost of used supplies	$           9,600
New school bus acquired	$         40,000
New ambulance acquired	$       120,000
New C' Hall acquired	$    1,044,000
Total expenditure	$    1,261,600

Table: (5)

h.

To determine

Identify the journal entry or entries which were prepared when the bonds were issued.

Explanation of Solution

The journal entry or entries which were prepared when the bonds were issued:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
	Cash		300,000
	Other Financing Uses			300,000
	(being the other financing used recorded)

Table: (6)