Chapter 17, Problem 17.14P

To determine

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 the 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	3,000,000
Appropriations control		2,980,000
Budgetary fund balance − unreserved		20,000
(Budgetary estimates recorded)
Taxes receivable	2,870,000
Allowance for uncollectible taxes		70,000
Property tax revenue		2,800,000
(Property tax levy recorded in tax receivable account)
Cash	2,810,000
Taxes receivable		2,810,000
(Received cash on account of property tax collections)
Allowance for Uncollectible taxes	40,000
Tax receivable		40,000
(Allowance for uncollectible created for doubtful tax receivable)
Cash	130,000
Miscellaneous receivables		130,000
(Cash received on account of Miscellaneous revenue)
Fund Balance − Reserved for encumbrances	60,000
Fund balance − unreserved)		60,000
(Reversal of prior reserves which has been renewed)
Encumbrances	60,000
Budgetary fund balance − reserved for encumbrances		60,000
(Record renewal of purchase commitments from prior year)
Expenditures	142,000
Due to other funds		142,000
((record liability to other funds for service received)
Budgetary fund balance − reserved for encumbrances	2,700,000
Encumbrances		2,700,000
(Reverse for purchase order received)
Expenditures	2,700,000
Vouchers payable		2,700,000
(Recording of expenditures)
Budgetary fund balance − reserved for encumbrances	60,000
Encumbrances		60,000
(Reverse for purchase order received)
Expenditures prior period	58,000
Vouchers payable		58,000
(Recording of actual expenditures for goods received)
Due to other funds	210,000
Vouchers payable		210,000
(Record approval for payment to other funds)
Vouchers payable	2,640,000
Cash		2,640,000
(Payments of vouchers during the period)
Encumbrances	91,000
Budgetary fund balance − reserved for encumbrances		91,000
(Recording of encumbrances on May 10)
(Closure of budgetary account)

1. The budget for the year is estimated to be $3,000,000 and appropriations were made for $2,980,000 and the balance amount is unreserved.
2. Taxes receivable is estimated to be $2,870,000 debited to receivable account and allowance for uncollectible is created remaining balance is credited to property tax revenue.
3. Property tax collections received debited to the cash account and credited to the tax receivable account.
4. Tax receivable worth $40,000 is expected to be uncollectible and written off from allowance for uncollectible.

July 1, 20X1 taxes receivable balance	$150,000
20X2 tax levy	2,870,000
Less: Tax collected	(2,810,000)
Tax receivable final balance	(170,000)
Taxes written off as uncollectible	$40,000

5. Cash received on account of miscellaneous revenue and debited to cash account.
6. Encumbrances of prior year renewed in the current year.
7. Renewal of encumbrances of the prior year.
8. Encumbrances for purchase commitment recorded.
9. Liability on service received from other funds recognized in expenditures.
10. Encumbrances of $2,700,000 reversed for purchase order received.
11. Expenditure for the year recognized by crediting to vouchers payable account.
12. Reversal of reserved encumbrances $60,000 on receipt of goods.
13. Actual expenditure of $58,000 on goods received recognized.
14. Amount due to other funds recognized and credited to vouchers payable.
15. Vouchers worth $2,640,000 payable during the year paid and credited to the cash account.
16. Encumbrances made on May 10 recorded.