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.

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

Accounts	TC Tax Agency Fund
	Debit ($)	Credit ($)
Cash Account Debit	1,440,000
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.

Accounts	TC Tax Agency Fund
	Debit ($)	Credit ($)
Due to Other Government Units Account Debit	1,440,000
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:

$\text{Cash distribution = (Cash collected }\times \text{ Composite rate) + 2\% charge/earnings}$

  $\text{Cash Distribution of TC General Fund = (\$1,440,000}\times \text{60\%)+11,520}$

  $=\$875,520$

  $\text{Cash Distribution of RC General Fund = (\$1,440,000}\times 3\text{0\%)+8,640}$

  $=\$423,360$

  $\text{Cash Distribution of NT General Fund = (\$1,440,000}\times 1\text{0\%)+(2,880)}$

  $=\$141,120$

Accounts	TC General Fund		RC General Fund		NT General Fund
	Debit ($)	Credit ($)	Debit ($)	Credit ($)	Debit ($)	Credit ($)
Expenditure	-	-	8,640	-	2,880	-
Cash	875,520	-	423,360	-	141,120	-
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:

Accounts	TC Tax Agency Fund		TC General Fund		RC General Fund		NT 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 Debit	5,990,000
To Due to Other Government Units Account		5,990,000
(Being to record taxes to be collected)
Cash Account Debit	1,440,000
To Taxes Receivable for other funds		1,440,000
(Being to record tax collection)
Due to Other Government Units Account Debit	1,440,000
To Cash Account		1,440,000
(Being to record the cash distribution)
Expenditure			-	-	8,640	-	2,880	-
Cash			875,520	-	423,360	-	141,120	-
Tax Receivable - Current			-	864,000	-	432,000	-	144,000
Revenue			-	11,520	-	-	-	-
(Being to record cash received by general fund)