General Fund Entries [AICPA Adapted]
The following information was abstacted from the accounts of the general fund of the City of Noble after the books had been closed for the fiscal year ended June 30, 20X2.
Additional Information
The budget for the fiscal year ended June 30, 20X2, provided for estimated revenue of $2,000,000 and appropriations of $1,940,000. Encumbrances of $1,070,000 were made during the year.
Required
Prepare proper
Concept introduction:
General fund: It accounts for all financial resources except for those accounted for in another fund. It includes transactions for general governmental services provided by the entity’s executive, legislative and judicial operations. The accounting for general fund, includes accounting for the inter fund activities on the general fund’s operating statement, the statement of revenues, expenditures, and changes in fund balance.
The entries to record budgeted and actual transactions for year ended June 30, 20X2.
Explanation of Solution
Particulars | Debit $ | Credit $ |
Estimated Revenues control | 2,000,000 | |
Appropriations control | 1,940,000 | |
Budgetary fund balance − Unreserved | 60,000 | |
(Budgetary estimates recorded) | ||
Taxes receivable | 1,870,000 | |
Allowance for uncollectible taxes | 10,000 | |
Property tax revenue | 1,860,000 | |
(Property tax levy recorded in tax receivable account) | ||
Allowance for uncollectible taxes | 8,000 | |
Taxes receivable | 8,000 | |
(Some of the tax receivable written off) | ||
Cash | 1,820,000 | |
Taxes receivable | 1,820,000 | |
(Received cash on account of property tax collections) | ||
Encumbrances | 1,070,000 | |
Budgetary fund balance− Reserved for encumbrances | 1,070,000 | |
(Record purchase commitments) | ||
Budgetary fund balance− Reserved for encumbrances | 1,000,000 | |
Encumbrances | 1,000,000 | |
(Reverse for purchase order received) | ||
Expenditures | 1,840,000 | |
Vouchers payable | 1,840,000 | |
(Recording of expenditures) | ||
Vouchers payable | 1,852,000 | |
Cash | 1,852,000 | |
(Payments of vouchers during the period) | ||
Appropriations control | 1,940,000 | |
Budgetary fund balance− Unreserved | 60,000 | |
Estimated revenues control | 2,000,000 | |
(Closure of budgetary account) | ||
Budgetary fund balance− Reserved for encumbrances | 70,000 | |
Encumbrances | 70,000 | |
(Closing of remaining encumbrances by reversal of budgetary balance) | ||
Fund balance − Unreserved | 70,000 | |
Fund balance − Reserved for Encumbrances | 70,000 | |
(Reserved fund balance for outstanding purchase commitments) | ||
Property tax revenue | 1,860,000 | |
Expenditures | 1,840,000 | |
Fund balance − Unreserved | 20,000 | |
(Closing of operating statement account) |
- The budget for the year is estimated to be $2,000,000 and appropriations were made for $1,940,000 and the balance amount is unreserved.
- Taxes receivable is estimated to be $1,870,000 debited to receivable account and allowance for uncollectible is created remaining balance is credited to property tax revenue.
- Tax receivable worth $8,000 is expected to be uncollectible and written off from allowance for uncollectible.
- Property tax collections received debited to the cash account and credited to the tax receivable account.
- Encumbrances for purchase commitment recorded.
- Encumbrances of $1,000,000 reversed for purchase order received.
- Expenditure for the year recognized by crediting to vouchers payable account.
- Vouchers payable during the year paid and credited to the cash account.
- Closing entries for appropriation passed by reversal of budgetary estimates and appropriations.
- Encumbrances not met lapsed and closed by reversing the remaining balance.
- Reserve created for the lapsed commitments in the current year to be meat in the next year.
- Operating statement account closed by debiting revenue account and credit expenditure account, and excess of revenue over expenditure credited to fund balance − unreserved.
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Chapter 17 Solutions
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