Chapter 16, Problem 16.16P

To determine

Difference between General Fund and Special Revenue Fund

General Fund: General funds are referred to the fund that reports the use of the funds for the day to day operating activities which is not reported in any other type of funds. General funds are not restricted to expended only in stated purposes.

Special Revenue Fund: Special Revenue funds are the funds that are established to account the revenue generated for specific resources. Special Revenue funds are strictly restricted to expended only in stated purposes.

: Preparation of Journal Entries of all the funds and groups of accounts.

Answer to Problem 16.16P

Journal entries of all the funds and group of accounts involved.

Explanation of Solution

Following are the Journal Entries for all the funds and groups of accounts involved:

Journal Entries

S. No.	Fund or Account Group	Account Title and Explanation	Debit Amount ($)	Credit Amount($)
2	Special Revenue Fund	Estimated Revenue Account Debit	264,500
		To Appropriations Account		250,000
		To Budgetary Fund Balance (Balancing Figure)		14,500
		(Being to record the budget of gasoline tax)
3	General Fund	Tax Receivable-Current account Debit	3,000,000
		To Allowance for uncollectible current taxes $(\$3,000,000\times 2\%)$		60,000
		To Revenue Account		2,940,000
		(Being to record tax levy)
4.	Capital Project Fund	Cash Account Debit (Balancing Figure)	985,000
		Expenditure Account Debit	5,000
		Other Financing uses Account Debit (working note : 1)	10,000
		To Other financing Sources Account		1,000,000
		(Being to record sale of bonds)
	General Long-Term debt	Amount to be provided for payment of term bonds debit	1,000,000
		To Term Bonds Payable Account		1,000,000
		(Being to record the liability for the term bonds)
5.	Capital Projects Fund	Encumbrances Account Debit	1,000,000
		To Fund Balance − Assigned		1,000,000
		(Being to record the signing of the construction contract)
6.	Capital Projects Fund	Expenditure Account Debit	1,250,000
		To Cash Account		1,250,000
		(Being to record the cost of constructed school)
	General Fixed Assets Account Group	Building Account Debit	1,250,000
		To Investment in General Fixed Assets capital projects fund account		1,250,000
		(Being to record the cost of school buildings)
7.	General fund	Other Financing Uses Account Debit	100,000
		To Cash Account		100,000
		(Being to record a transfer of the debt service fund)
	Capital Projects Fund	Cash Account Debit	100,000
		To Other financing Sources Account		100,000
		(Being to record the transfer of general funds)
8.	General Fixed Assets Account Group	Land Account Debit	500,000
		To Investment in General Fixed Assets- Donations		500,000
		(Being to record the donation of land)
9.	Special Revenue Fund	Cash Account Debit	205,000
		Due from State Government Account Debit	60,000
		To Revenue Account		205,000
		To Deferred Revenue Account		60,000
		(Being to record state gasoline taxes)
10.	Special Revenue Fund	Expenditures Account Debit	410,000
		To Vouchers Payable Account		410,000
		(Being to record the vouchers approved for payment)

Working Notes:

1. Since the bonds are sold at 99, so, 1% may be the discount which is considered as other financing uses. Other financing uses is equal to $10,000 (1% of $1,000,000).