Chapter Three: Q 2; and, E 5, 6, and 7, and Chapter Four: E 4, 5, 6, 7, 9, and 10.
3-2. Using the net (expense) or revenue format recommended by GASB standards requires reporting of expenses that are directly related to a function or program on the same line as that function or program. Indirect expenses, those that are not directly related to a function or program, such as interest on long-term debt, should be reported on a separate line. It is important to correctly identify the nature of the expenses so they will be reported on the line of the right function or program, or as a separate line item. Otherwise, incorrect amounts will be reported for particular functions/program costs.
3-5. City of Jackson a. Estimated revenues totalFY 2014 $ 4,650,000 Appropriations totalFY 2014 4,850,000 Therefore, unassigned fund balances at the end of FY 2013 must be at least $ (200,000) or else the fund would be thrown into a deficit.
General Ledger Subsidiary Ledger Debits Credits Debits Credits b. ESTIMATED REVENUES 4,650,000 BUDGETARY FUND BALANCE 200,000 APPROPRIATIONS 4,850,000
Estimated Revenues Ledger: TAXES 3,000,000 INTERGOVERNMENTAL REVENUES 1,000,000 LICENSES AND PERMITS 400,000 FINES AND FORFEITS 150,000 MISCELLANEOUS REVENUES 100,000
Appropriations Ledger: GENERAL GOVERNMENT 1,000,000 PUBLIC SAFETY 2,000,000 PUBLIC WORKS 950,000 HEALTH AND WELFARE 850,000 MISCELLANEOUS 50,000
3-6. City of Jackson (Contd) General Ledger Subsidiary Ledger Debits Credits Debits Credits a. ENCUMBRANCES2014 395,000 ENCUMBRANCES OUTSTANDING2014 395,000
Encumbrances Ledger: GENERAL GOVERNMENT 50,000 PUBLIC SAFETY 200,000 PUBLIC WORKS 75,000 HEALTH AND WELFARE 65,000 MISCELLANEOUS 5,000
b. Purchase orders issued by a governmental fund have the effect of using all or a portion of one or more appropriations for that fund. Issuance of purchase orders or other commitment documents is a step in the expenditure of an appropriation; administrators may be subject to legal penalties if they expend more resources than were appropriated. Recording encumbrances helps administrators avoid over-expending appropriations. The same legal issues do not exist in business organizations, although a well-managed business should certainly keep track of outstanding purchase orders and contracts to have a clear understanding of what transactions are in process that will result in the acquisition of assets, the incurring of expenses, and the incurring of liabilities.
3-7. General Ledger Subsidiary Ledger Debits Credits Debits Credits a. ESTIMATED REVENUES 2,700,000 BUDGETARY FUND BALANCE 50,000 APPROPRIATIONS 2,650,000
Estimated Revenues Ledger: TAXES 1,900,000 LICENSES AND PERMITS 350,000 FINES AND FORFEITS 250,000 INTERGOVERNMENTAL REVENUES 200,000 Appropriations Ledger: GENERAL GOVERNMENT 500,000 PUBLIC SAFETY 1,600,000 PUBLIC WORKS 350,000 PARKS AND RECREATION 150,000 MISCELLANEOUS 50,000
b. General Ledger Subsidiary Ledger Debits Credits Debits Credits 1. CASH 43,000 REVENUES 43,000 Revenues Ledger: LICENSES AND PERMITS 31,000 FINES AND FORFEITS 12,000
General Ledger Subsidiary Ledger Debits Credits Debits Credits 2. ENCUMBRANCES2014 29,900 ENCUMBRANCES OUTSTANDING2014 29,900 Encumbrances Ledger: GENERAL GOVERNMENT 7,400 PUBLIC SAFETY 11,300 PUBLIC WORKS 6,100 PARKS AND RECREATION 4,200 MISCELLANEOUS 900
3. ENCUMBRANCES OUTSTANDING2014 29,100 ENCUMBRANCES2014 29,100 EXPENDITURES2014 29,200 CASH 29,200 Encumbrances Ledger: GENERAL GOVERNMENT 7,400 PUBLIC SAFETY 10,700 PUBLIC WORKS 5,900 PARKS AND RECREATION 4,200 MISCELLANEOUS 900 Expenditures Ledger: GENERAL GOVERNMENT 7,300 PUBLIC SAFETY 10,800 PUBLIC WORKS 6,100 PARKS AND RECREATION 4,100 MISCELLANEOUS 900
c. CALCULATION OF BUDGETED BUT UNREALIZED REVENUES AS OF JULY 31, 2013 UNREALIZED SOURCE BUDGETED ACTUAL REVENUE PROPERTY TAXES $1,900,000 $ -0- $1,900,000 LICENSES AND PERMITS 350,000 31,000 319,000 FINES AND FORFEITS 250,000 12,000 238,000 INTERGOVERNMENTAL 200,000 -0- 200,000 TOTAL $2,700,000 $43,000 $2,657,000
d. CALCULATION OF AVAILABLE APPROPRIATIONS, AS OF JULY 31, 2013 AVAILABLE APPROPRIATIONS ENCUMBRANCES EXPENDITURES APPROPRIATIONS GENERAL GOVERNMENT $ 500,000 $ -0- $ 7,300 $ 492,700 PUBLIC SAFETY 1,600,000 600 10,800 1,588,600 PUBLIC WORKS 350,000 200 6,100 343,700 PARKS AND RECREATION 150,000 -0- 4,100 145,900 MISCELLANEOUS 50,000 -0- 900 49,100 TOTAL $2,650,000 $800 $29,200 $2,620,000
Chapter Four: E 4, 5, 6, 7, 9, and 10. 4-4. Village of Darby
a. Revenues = levy (.03 X levy) = .97 X levy = $2,660,000
Levy = $2,660,000 .97 = $2,742,268 (rounded to nearest dollar)
Rate X (assessed valuation 100) = levy
Rate = levy (assessed valuation 100)
Rate = $2,742,268 1,357,143 = $2.02 per $100 of assessed valuation
Debits Credits
b. TAXES RECEIVABLECURRENT 2,742,268 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 82,268 REVENUES 2,660,000
c. CASH 2,540,000 TAXES RECEIVABLECURRENT 2,540,000
(Note: Interest on notes is $1,460,000 X .06 X 6/12 =$43,800)
4-6. CITY OF MARSHALL GENERAL JOURNAL
Debits Credits a. General Fund: INVENTORY OF SUPPLIES 12,000 FUND BALANCENONSPENDABLE INVENTORY OF SUPPLIES 12,000
b. General Fund: APPROPRIATIONS 6,224,000 ESTIMATED OTHER FINANCING USES 2,776,000 ESTIMATED REVENUES 7,997,000 BUDGETARY FUND BALANCE 1,003,000
REVENUES 7,980,000 FUND BALANCEUNASSIGNED 982,000 EXPENDITURES 6,192,000 OTHER FINANCING USES 2,770,000
4-7. CITY OF SMITHTON GENERAL JOURNAL
(1) May 1, 2014 Debits Credits
DUE FROM STATE GOVERNMENT 200,000 DEFERRED REVENUES 200,000
(Note: There are no eligibility requirements stipulated in the grant. Thus, the grant can be recorded upon notification. There are, however, time requirements that half of the grant is to be used in each of the 2015 and 2016 fiscal years. Therefore, revenues cannot be recognized until the period for which use of the grant is intended.)
Governmental Activities: A CASH 500 EXPENSESGENERAL GOVERNMENT 500
Note A: There is no business-type activities ledger since the government-wide data will be the same as that of the enterprise fund.
Debits Credits
Enterprise Fund: SUPPLIES EXPENSE 500 CASH 500
3. General Fund: INTERFUND LOANS RECEIVABLE NONCURRENT 50,000 CASH 50,000
FUND BALANCEUNASSIGNED 50,000 FUND BALANCENONSPENDABLE NONCURRENT INTERFUND LOANS RECEIVABLE 50,000
Governmental Activities: NO EFFECT
Internal Service Fund: CASH 50,000 INTERFUND LOANS PAYABLE NONCURRENT 50,000
4. General Fund: OTHER FINANCING USESINTERFUND TRANSFERS OUT 100,000 CASH 100,000
Governmental Activities: NO EFFECT
Debt Service Fund: CASH 100,000 OTHER FINANCING SOURCES INTERFUND TRANSFERS IN 100,000
) Debits Credits 5. General Fund: CASH 5,000 OTHER FINANCING SOURCES INTERFUND TRANSFERS IN 5,000
Governmental Activities: NO EFFECT
Capital Projects Fund: OTHER FINANCING USES INTERFUND TRANSFERS OUT 5,000 CASH 5,000
b. Proprietary funds, such as the enterprise fund, measure total economic resources using the accrual basis of accounting. Since this is the same measurement focus and basis of accounting used at the government-wide level, there would be no difference between entries in the enterprise fund and a business-type activities journal. Note that although the internal service funds are proprietary funds focusing on total economic resources using the accrual basis of accounting, they are combined with governmental activities if they predominantly provide services to departments within the government rather than to enterprise funds.
4-10. a. CITY OF HINTON JOURNAL ENTRIES FY 2014 Debits Credits General Fund: (1) ESTIMATED REVENUES 3,140,000 APPROPRIATIONS 3,100,000 BUDGETARY FUND BALANCE 40,000
General Fund: (2) CASH 490,000 EXPENDITURES2014 10,000 TAX ANTICIPATION NOTES PAYABLE 500,000 (COMPUTATION OF DISCOUNT: $500,000 X .06 X 1/3 YEAR = $10,000.)
Debits Credits General Fund: (3) TAXES RECEIVABLECURRENT 2,150,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 64,500 REVENUES 2,085,500 (COMPUTATIONS: $43,000,000 ASSESSED VALUATION X $5 TAX RATE PER $100 = $2,150,000 GROSS LEVY; $2,150,000 GROSS LEVY X .03 = $64,500 ESTIMATED UNCOLLECTIBLE.)
Governmental Activities: TAXES RECEIVABLECURRENT 2,150,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 64,500 GENERAL REVENUESPROPERTY TAXES 2,085,500
General Fund: (4) ENCUMBRANCES2014 2,060,000 ENCUMBRANCES OUTSTANDING2014 2,060,000
General Fund and Governmental Activities: (5) TAXES RECEIVABLECURRENT 25,000 REVENUES (General Revenues in Governmental Activities) 25,000 ($500,000 X $5 PER $100 OF VALUATION)
General Fund and Governmental Activities: (6) CASH 2,364,840 TAXES RECEIVABLECURRENT 1,961,000 TAXES RECEIVABLEDELINQUENT 383,270 INTEREST AND PENALTIES RECEIVABLE 20,570 ) Debits Credits General Fund: (7) INTEREST AND PENALTIES RECEIVABLE 38,430 ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 11,529 REVENUES 26,901 Governmental Activities: INTEREST AND PENALTIES RECEIVABLE 38,430 ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 11,529 GENERAL REVENUESINTEREST AND PENALTIES ON DELINQUENT TAXES 26,901
General Fund: (8) BUDGETARY FUND BALANCE 80,000 ESTIMATED REVENUES 80,000 (THIS ENTRY ADJUSTS THE ORIGINAL BUDGETARY INCREASE OF $40,000 IN BUDGETARY FUND BALANCE TO A NET DECREASE OF $40,000.)
General Fund: (9) EXPENDITURES2014 819,490 DUE TO FEDERAL GOVERNMENT 166,400 DUE TO STATE GOVERNMENT 34,400 CASH 618,690 Governmental Activities: EXPENSES (function details omitted) 819,490 DUE TO FEDERAL GOVERNMENT 166,400 DUE TO STATE GOVERNMENT 34,400 CASH 618,690 Debits Credits General Fund: (10) EXPENDITURES2014 62,690 DUE TO FEDERAL GOVERNMENT 62,690 Governmental Activities: EXPENSES(function details omitted) 62,690 DUE TO FEDERAL GOVERNMENT 62,690
General Fund: (11) CASH 947,000 REVENUES 947,000
Governmental Activities: CASH 947,000 REVENUES(itemize as program or general and by source) 947,000
General Fund and Governmental Activities: (12) DUE TO FEDERAL GOVERNMENT 288,580 DUE TO STATE GOVERNMENT 34,400 VOUCHERS PAYABLE 322,980
General Fund and Governmental Activities: (15) TAX ANTICIPATION NOTES PAYABLE 500,000 CASH 500,000
General Fund and Governmental Activities: (16) TAXES RECEIVABLEDELINQUENT 214,000 TAXES RECEIVABLECURRENT 214,000
ESTIMATED UNCOLLECTIBLE CURRENT TAXES 64,500 ESTIMATED UNCOLLECTIBLE DELINQUENT TAXES 64,500
General Fund: (17) INVENTORY OF SUPPLIES 3,000 FUND BALANCENONSPENDABLE INVENTORY OF SUPPLIES 3,000 Governmental Activities: INVENTORY OF SUPPLIES 3,000 EXPENSES (Function details omitted) 3,000
Debits Credits b. CLOSING ENTRIES, APRIL 30, 2014 General Fund: APPROPRIATIONS 3,100,000 ESTIMATED REVENUES 3,060,000 BUDGETARY FUND BALANCE 40,000
REVENUES 3,084,401 EXPENDITURES2014 2,871,720 FUND BALANCEUNASSIGNED 212,681
Governmental Activities: (Not closed here since the governmental activities general ledger includes operating statement transactions related to all governmental funds, not just those of the General Fund. See Chapter 9 for an example of closing the governmental activities temporary accounts.)
c. CITY OF HINTON GENERAL FUND BALANCE SHEET AS OF APRIL 30, 2014
ASSETS CASH $ 486,520 TAXES RECEIVABLEDELINQUENT $413,730 LESS: ESTIMATED UNCOLLECTIBLE TAXESDELINQUENT 253,500 160,230 INTEREST AND PENALTIES RECEIVABLE 44,140 LESS: ESTIMATED UNCOLLECTIBLE INTEREST AND PENALTIES 22,689 21,451 INVENTORY OF SUPPLIES 19,100 TOTAL ASSETS $ 687,301
LIABILITIES AND FUND BALANCES LIABILITIES: VOUCHERS PAYABLE $157,390 FUND BALANCES: NONSPENDABLEINVENTORY OF SUPPLIES $ 19,100 UNASSIGNED 510,811 TOTAL FUND BALANCES 529,911 TOTAL LIABILITIES AND FUND BALANCES $ 687,301
d. CITY OF HINTON GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED APRIL 30, 2014
REVENUES TAXES $2,110,500 INTEREST AND PENALTIES ON TAXES 26,901 OTHER SOURCES 947,000 TOTAL REVENUES 3,084,401 EXPENDITURES SALARIES AND WAGES 882,180 INTEREST ON NOTE PAYABLE 10,000 OTHER 1,979,540 TOTAL EXPENDITURES 2,871,720 EXCESS OF REVENUES OVER EXPENDITURES 212,681 INCREASE IN INVENTORY OF SUPPLIES 3,000 FUND BALANCES, MAY 1, 2013 314,230 FUND BALANCES, APRIL 30, 2014 $ 529,911
Computations: Taxes = [4-10(3) 2,085,500 + 4-10(5) 25,000] Interest and Penalties on Taxes = [4-10(7) 26,901] Other Sources = [4-10(11) 946,700] Salaries and Wages = [4-10(9) 819,490 + 4-10(10) 62,690] Interest on Notes Payable = [4-10(2) $10,000] Other = [4-10(13) 1,987,570 - 4-10(14) 8030]
NOTE: The Governmental Activities general ledger is not shown here.
CITY OF HINTON General Fund General Ledger (Not Required)
Due to Federal Government Revenues____________ 4-10(12) 288,580 5/1/2013 Bal. 59,490 4-10. b 3,084,401 4-10(3) 2,085,500 4-10(9) 166,400 4-10(5) 25,000 4-10(10) 62,690 4-10(7) 26,901 4/30/2014 Bal. -0- 4-10(11) 947,000
Due to State Government Expenditures2014_________ 4-10(12) 34,400 4-10(9) 34,400 4-10(2) 10,000 4-10(14) 8,030 4/30/2014 Bal. -0- 4-10(9) 819,490 4-10. b 2,871,720 4-10(10) 62,690 4-10(13) 1,987,570
Tax Anticipation Notes Payable 4-10 (15) 500,000 4-10 (2) 500,000 4/30/2014 Bal. -0- Fund BalanceNonspendable Fund BalanceUnassigned ____Inventory of Supplies _ 5/1/2013 Bal. 298,130 5/1/2013 Bal. 16,100 4-10. b 212,681 4-10(17) 3000 4/30/2014 Bal. 510,811 4/30/2014 Bal. 19,100