ADVANCED ACCOUNTING
ADVANCED ACCOUNTING
12th Edition
ISBN: 9780357671221
Author: FISCHER
Publisher: CENGAGE L
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Chapter 16, Problem 16.15P
To determine

General Fund:

General fund are those funds in which account holding the revenue and expense balances that are used in the business and agencies that are open to the public. General funds are the chief operating fund for the entire government.

: Preparation of Journal Entries to record the transaction from period July 1, 2018 through October 1, 2018.

Expert Solution & Answer
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Answer to Problem 16.15P

Following are the Cash Distribution:

  1. TC General Fund = $875,520
  2. RC General Fund = $423,360
  3. NT General Fund = $141,120

Explanation of Solution

AccountsTC Tax Agency Fund
Debit ($)Credit ($)
Cash Account Debit1,440,000 
To Taxes Receivable for other funds 1,440,000
(Being to record tax collection)  
  • Cash account increases the value of asset. Therefore, it is debited.
  • Tax receivables for other funds decreases the value of asset. Therefore, it is credited.
AccountsTC Tax Agency Fund
Debit ($)Credit ($)
Due to Other Government Units Account Debit1,440,000 
To Cash Account 1,440,000
(Being to record the cash distribution)  
  • Due to Other Government Units decreases the value of the liability. Therefore, it is debited.
  • Cash account decreases the value of assets. Therefore, it is credited.

Notes for calculating the cash distribution:

Cash distribution = (Cash collected × Composite rate) + 2% charge/earnings

  Cash Distribution of TC General Fund = ($1,440,000×60%)+11,520

  =$875,520

  Cash Distribution of RC General Fund = ($1,440,000×30%)+8,640

  =$423,360

  Cash Distribution of NT General Fund = ($1,440,000×10%)+(2,880)

  =$141,120

AccountsTC General FundRC General FundNT General Fund
Debit ($)Credit ($)Debit ($)Credit ($)Debit ($)Credit ($)
Expenditure -8,640 -2,880
Cash875,520423,360141,120
Tax Receivable - Current -864,000 -432,000 -144,000
Revenue -11,520 -
(Being to record cash received by general fund)      
  • Expenditure decreases the value of liability. Therefore, it is debited.
  • Cash account increases the value of assets. Therefore, it is debited.
  • Tax Receivable decreases the value of assets. Therefore, it is credited.
  • Revenue decreases the value of assets. Therefore, it is credited.

Journalizing in the required format:

AccountsTC Tax Agency FundTC General FundRC General FundNT General Fund
Debit ($)Credit ($)Debit ($)Credit ($)Debit ($)Credit ($)Debit ($)Credit ($)
Tax Receivable - Current Account Debit  3,600,000 1,800,000 6,00,000 
To Allowance for uncollectible taxes   1,00,000 60,000 40,000
To Revenue   3,500,000 1,740,000 5,60,000
(Being to record tax levy)        
Revenue Account Debit      10,000 
To Tax receivables - Current       10,000
(Being to correct tax levy error)        
Taxes Receivable for other funds Account Debit5,990,000       
To Due to Other Government Units Account 5,990,000      
(Being to record taxes to be collected)        
Cash Account Debit1,440,000       
To Taxes Receivable for other funds 1,440,000      
(Being to record tax collection)        
Due to Other Government Units Account Debit1,440,000       
To Cash Account 1,440,000      
(Being to record the cash distribution)        
Expenditure   -8,6402,880
Cash  875,520423,360141,120
Tax Receivable - Current   -864,000432,000144,000
Revenue   -11,520 -
(Being to record cash received by general fund)        

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Chapter 16 Solutions

ADVANCED ACCOUNTING

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