Solution Chap 2 and 3

8/10/2019 Solution Chap 2 and 3

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Acct 522 81 E September 16 Fall, 2014 Wilson

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 reportingof 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 asinterest on long-term debt, should be reported on a separate line. It is important to correctlyidentify 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 particularfunctions/program costs.

3-5. City of Jackson

a . Estimated revenues total FY 2014 $ 4,650,000Appropriations total FY 2014 4,850,000Therefore, unassigned fund balances at theend of FY 2013 must be at least $ (200,000)or else the fund would be thrown into a deficit.

General Ledger Subsidiary LedgerDebits Credits Debits Credits

b . ESTIMATED REVENUES 4,650,000BUDGETARY FUNDBALANCE 200,000APPROPRIATIONS 4,850,000

Estimated Revenues Ledger:TAXES 3,000,000INTERGOVERNMENTAL REVENUES 1,000,000LICENSES AND PERMITS 400,000FINES AND FORFEITS 150,000MISCELLANEOUS REVENUES 100,000

Appropriations Ledger:GENERAL GOVERNMENT 1,000,000PUBLIC SAFETY 2,000,000

PUBLIC WORKS 950,000HEALTH AND WELFARE 850,000MISCELLANEOUS 50,000


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3-6. City of Jackson (Contd) General Ledger Subsidiary Ledger

Debits Credits Debits Creditsa . ENCUMBRANCES 2014 395,000

ENCUMBRANCESOUTSTANDING 2014 395,000

Encumbrances Ledger :GENERAL GOVERNMENT 50,000PUBLIC SAFETY 200,000PUBLIC WORKS 75,000HEALTH AND WELFARE 65,000MISCELLANEOUS 5,000

b . Purchase orders issued by a governmental fund have the effect of using all or a portion of oneor 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 tolegal penalties if they expend more resources than were appropriated. Recordingencumbrances helps administrators avoid over-expending appropriations.

The same legal issues do not exist in business organizations, although a well-managed businessshould certainly keep track of outstanding purchase orders and contracts to have a clearunderstanding of what transactions are in process that will result in the acquisition of assets,the incurring of expenses, and the incurring of liabilities.


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3-7.General Ledger Subsidiary Ledger

Debits Credits Debits Creditsa. ESTIMATED REVENUES 2,700,000

BUDGETARY FUNDBALANCE 50,000

APPROPRIATIONS 2,650,000

Estimated Revenues Ledger:TAXES 1,900,000LICENSES AND PERMITS 350,000FINES AND FORFEITS 250,000INTERGOVERNMENTALREVENUES 200,000

Appropriations Ledger:GENERAL GOVERNMENT 500,000PUBLIC SAFETY 1,600,000PUBLIC WORKS 350,000PARKS AND RECREATION 150,000MISCELLANEOUS 50,000

b.General Ledger Subsidiary Ledger

Debits Credits Debits Credits1. CASH 43,000

REVENUES 43,000Revenues Ledger:

LICENSES AND PERMITS 31,000

FINES AND FORFEITS 12,000


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General Ledger Subsidiary Ledger Debits Credits Debits Credits

2. ENCUMBRANCES2014 29,900ENCUMBRANCES

OUTSTANDING2014 29,900Encumbrances Ledger: GENERAL GOVERNMENT 7,400PUBLIC SAFETY 11,300PUBLIC WORKS 6,100PARKS AND RECREATION 4,200MISCELLANEOUS 900

3. ENCUMBRANCESOUTSTANDING2014 29,100

ENCUMBRANCES2014 29,100EXPENDITURES2014 29,200

CASH 29,200Encumbrances Ledger:

GENERAL GOVERNMENT 7,400PUBLIC SAFETY 10,700PUBLIC WORKS 5,900PARKS AND RECREATION 4,200MISCELLANEOUS 900

Expenditures Ledger: GENERAL GOVERNMENT 7,300PUBLIC SAFETY 10,800PUBLIC WORKS 6,100PARKS AND RECREATION 4,100

MISCELLANEOUS 900


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ESTIMATED UNCOLLECTIBLE CURRENT TAXES 82,268

ESTIMATED UNCOLLECTIBLE DELINQUENTTAXES 82,268

INTEREST AND PENALTIES RECEIVABLE 12,136ESTIMATED UNCOLLECTIBLE INTERESTAND PENALTIES 1,214

REVENUES 10,922


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4-5. a . City of Troy

Calculation of Estimated RequiredTax Anticipation Financing

Estimated Expenditure Requirements:Budgeted expenditures, remainder of FY 2014 $2,500,000Current liabilities payable 830,000 $3,330,000

Estimated Resources Available:Cash on hand, April 1, 2014 770,000Collections of budgeted FY 2014 revenues

and delinquent property taxes, includinginterest and penalties 1,100,000 1,870,000

Estimated Amount of Required TaxAnticipation Note Financing $1,460,000

b . General Fund and Governmental Activities: Debits Credits

CASH 1,460,000TAX ANTICIPATION NOTES PAYABLE 1,460,000

b. General Fund: TAX ANTICIPATION NOTES PAYABLE 1,460,000EXPENDITURES2014 43,800

CASH 1,503,800

Governmental Activities: TAX ANTICIPATION NOTES PAYABLE 1,460,000EXPENSESGENERAL GOVERNMENT 43,800

CASH 1,503,800

(Note: Interest on notes is $1,460,000 X .06 X 6/12=$43,800)


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4-6. CITY OF MARSHALL

GENERAL JOURNAL

Debits Creditsa . General Fund:

INVENTORY OF SUPPLIES 12,000FUND BALANCENONSPENDABLE

INVENTORY OF SUPPLIES 12,000

b. General Fund: APPROPRIATIONS 6,224,000ESTIMATED OTHER FINANCING USES 2,776,000

ESTIMATED REVENUES 7,997,000BUDGETARY FUND BALANCE 1,003,000

REVENUES 7,980,000FUND BALANCEUNASSIGNED 982,000

EXPENDITURES 6,192,000OTHER FINANCING USES 2,770,000


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4-7. CITY OF SMITHTONGENERAL JOURNAL

(1) May 1, 2014Debits Credits

DUE FROM STATE GOVERNMENT 200,000DEFERRED REVENUES 200,000

(Note: There are no eligibility requirements stipulated in thegrant. Thus, the grant can be recorded uponnotification. There are, however, time requirementsthat half of the grant is to be used in each of the

2015 and 2016 fiscal years. Therefore, revenuescannot be recognized until the period for whichuse of the grant is intended.)

(2) July 1, 2014

CASH 100,000DUE FROM STATE GOVERNMENT 100,000

DEFERRED REVENUES 100,000REVENUES 100,000

(3) During FY 2015

EXPENDITURES 90,000

VOUCHERS PAYABLE (or CASH) 90,000

(4) July 1, 2015

Same entries as part (2).

4-9. a . CITY OF ATWATERDebits Credits

1. General Fund :EXPENDITURES 100,000

CASH 100,000

Governmental Activities :EXPENSESPUBLIC SAFETY 100,000

CASH 100,000

Enterprise Fund : CASH 100,000

REVENUES 100,000


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2. General Fund:CASH 500

EXPENDITURES 500

Governmental Activities :A

CASH 500EXPENSESGENERAL GOVERNMENT 500

Note A: There is no business-type activities ledger since the government-wide datawill 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 50,000CASH 50,000

FUND BALANCEUNASSIGNED 50,000FUND BALANCENONSPENDABLE

NONCURRENT INTERFUND LOANSRECEIVABLE 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 100,000CASH 100,000

Governmental Activities : NO EFFECT

Debt Service Fund : CASH 100,000

OTHER FINANCING SOURCES INTERFUNDTRANSFERS IN 100,000


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) Debits Credits

5. General Fund :CASH 5,000

OTHER FINANCING SOURCES INTERFUNDTRANSFERS IN 5,000

Governmental Activities :NO EFFECT

Capital Projects Fund:OTHER FINANCING USES

INTERFUND TRANSFERS OUT 5,000CASH 5,000

b. Proprietary funds, such as the enterprise fund, measure total economic resources using theaccrual 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 theenterprise fund and a business-type activities journal. Note that although the internal servicefunds are proprietary funds focusing on total economic resources using the accrual basis ofaccounting, they are combined with governmental activities if they predominantly provideservices to departments within the government rather than to enterprise funds.


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4-10. a. CITY OF HINTON

JOURNAL ENTRIES FY 2014Debits Credits

General Fund:(1) ESTIMATED REVENUES 3,140,000

APPROPRIATIONS 3,100,000BUDGETARY FUND BALANCE 40,000

General Fund:(2) CASH 490,000

EXPENDITURES 2014 10,000TAX ANTICIPATION NOTES PAYABLE 500,000

(COMPUTATION OF DISCOUNT: $500,000 X .06 X 1/3 YEAR = $10,000.)

Governmental Activities:CASH 490,000EXPENSESGENERAL GOVERNMENT 10,000

TAX ANTICIPATION NOTES PAYABLE 500,000


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Debits CreditsGeneral Fund:

(3) TAXES RECEIVABLE CURRENT 2,150,000ESTIMATED UNCOLLECTIBLE CURRENTTAXES 64,500

REVENUES 2,085,500(COMPUTATIONS: $43,000,000 ASSESSED VALUATION X $5 TAX RATE PER $100 = $2,150,000 GROSSLEVY; $2,150,000 GROSS LEVY X .03 = $64,500 ESTIMATED UNCOLLECTIBLE.)

Governmental Activities :TAXES RECEIVABLE CURRENT 2,150,000

ESTIMATED UNCOLLECTIBLE CURRENTTAXES 64,500

GENERAL REVENUESPROPERTY TAXES 2,085,500

General Fund:(4) ENCUMBRANCES 2014 2,060,000

ENCUMBRANCES OUTSTANDING 2014 2,060,000

General Fund and Governmental Activities:(5) TAXES RECEIVABLE CURRENT 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 RECEIVABLE CURRENT 1,961,000TAXES RECEIVABLE DELINQUENT 383,270

INTEREST AND PENALTIES RECEIVABLE 20,570)

Debits Credits General Fund :

(7) INTEREST AND PENALTIES RECEIVABLE 38,430ESTIMATED UNCOLLECTIBLE INTEREST

AND PENALTIES 11,529REVENUES 26,901

Governmental Activities :INTEREST AND PENALTIES RECEIVABLE 38,430

ESTIMATED UNCOLLECTIBLE INTERESTAND PENALTIES 11,529

GENERAL REVENUESINTEREST ANDPENALTIES 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 BALANCETO A NET DECREASE OF $40,000.)


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General Fund:

(9) EXPENDITURES 2014 819,490DUE TO FEDERAL GOVERNMENT 166,400DUE TO STATE GOVERNMENT 34,400

CASH 618,690Governmental Activities:EXPENSES (function details omitted) 819,490

DUE TO FEDERAL GOVERNMENT 166,400DUE TO STATE GOVERNMENT 34,400CASH 618,690

Debits Credits General Fund:

(10) EXPENDITURES 2014 62,690DUE 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 programor general and by source) 947,000

General Fund and Governmental Activities: (12) DUE TO FEDERAL GOVERNMENT 288,580

DUE TO STATE GOVERNMENT 34,400VOUCHERS PAYABLE 322,980

General Fund:(13) ENCUMBRANCES OUTSTANDING 2014 1,988,040

ENCUMBRANCES 2014 1,988,040EXPENDITURES 2014 1,987,570

VOUCHERS PAYABLE 1,987,570Governmental Activities:

EXPENSES (function details omitted) 1,987,570VOUCHERS PAYABLE 1,987,570


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Debits CreditsGeneral Fund:

(14) VOUCHERS PAYABLE 2,301,660CASH 2,293,630EXPENDITURES 2014 8,030

Governmental Activities:VOUCHERS PAYABLE 2,301,660

CASH 2,293,630EXPENSES (function detail omitted) 8,030

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 CURRENTTAXES 64,500

ESTIMATED UNCOLLECTIBLEDELINQUENT TAXES 64,500

General Fund:(17) INVENTORY OF SUPPLIES 3,000

FUND BALANCENONSPENDABLE INVENTORY OF SUPPLIES 3,000

Governmental Activities:

INVENTORY OF SUPPLIES 3,000EXPENSES (Function details omitted) 3,000


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Debits Credits b . CLOSING ENTRIES, APRIL 30, 2014

General Fund:APPROPRIATIONS 3,100,000

ESTIMATED REVENUES 3,060,000BUDGETARY FUND BALANCE 40,000

REVENUES 3,084,401EXPENDITURES2014 2,871,720FUND BALANCEUNASSIGNED 212,681

Governmental Activities:(Not closed here since the governmental activities general ledger includes operatingstatement 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.)


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c. CITY OF HINTON

GENERAL FUND BALANCE SHEETAS OF APRIL 30, 2014

ASSETSCASH $ 486,520TAXES RECEIVABLE DELINQUENT $413,730LESS: ESTIMATED UNCOLLECTIBLE

TAXES DELINQUENT 253,500 160,230INTEREST AND PENALTIES RECEIVABLE 44,140LESS: ESTIMATED UNCOLLECTIBLE

INTEREST AND PENALTIES 22,689 21,451INVENTORY OF SUPPLIES 19,100

TOTAL ASSETS $ 687,301

LIABILITIES AND FUND BALANCESLIABILITIES:VOUCHERS PAYABLE $157,390

FUND BALANCES:NONSPENDABLEINVENTORY

OF SUPPLIES $ 19,100UNASSIGNED 510,811

TOTAL FUND BALANCES 529,911TOTAL LIABILITIES AND FUND BALANCES $ 687,301


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d . CITY OF HINTON

GENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCEFOR THE YEAR ENDED APRIL 30, 2014

REVENUESTAXES $2,110,500INTEREST AND PENALTIES ON TAXES 26,901OTHER SOURCES 947,000

TOTAL REVENUES 3,084,401EXPENDITURES

SALARIES AND WAGES 882,180INTEREST ON NOTE PAYABLE 10,000OTHER 1,979,540

TOTAL EXPENDITURES 2,871,720

EXCESS OF REVENUES OVER EXPENDITURES 212,681INCREASE IN INVENTORY OF SUPPLIES 3,000FUND BALANCES, MAY 1, 2013 314,230FUND 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]


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NOTE: The Governmental Activities general ledger is not shown here.

CITY OF HINTONGeneral Fund

General Ledger (Not Required)

Cash Interest and Penalties Rec. __ ____ 5/1/2013 Bal. 97,000 4-10(9) 618,690 5/1/2013 Bal.26,280 4-10(6) 20,5704-10(2) 490,000 4-10(14) 2,293,630 4-10(7) 38,4304-10(6) 2,364,840 4-10(15) 500,000 4/30/2014 Bal 44,1404-10(11) 947,0004/30/2014 Bal. 486,520

Taxes Receivable Current Est. Uncollectible Interest & Penalties _4-10(3) 2,150,000 4-10(6) 1,961,000 5/1/2013 Bal. 11,1604-10(5) 25,000 4-10(16) 214,000 4-10(7) 11,5294/30/2014 Bal. -0- 4/30/2014 Bal. 22,689

Est. Uncollectible Current Taxes Inventory of Supplies_________4-10(16) 64,500 4-10(3) 64,500 5/1/2013 Bal.16,100

4/30/2014 Bal. -0- 4-10(17) 3,0004/30/2014 Bal. 19,100

Taxes Receivable Delinquent5/1/2013 Bal. 583,000 4-10(6) 383,2704-10(15) 214,0004/30/2014 Bal. 413,730

Est. Uncollectible Delinquent Taxes Vouchers Payable___________5/1/2013 Bal.189,000 4-10(14) 2,301,660 5/1/2013 Bal 148,500

4-10(16) 64,500 4-10(12) 322,9804/30/2014 Bal. 253,500 4-10(13) 1,987,570

4/30/2014 Bal. 157,390

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) 2,085,5004-10(9) 166,400 4-10(5) 25,0004-10(10) 62,690 4-10(7) 26,901

4/30/2014 Bal. -0- 4-10(11) 947,000

Due to State Government Expenditures 2014_________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 2,871,7204-10(10) 62,690

4-10(13) 1,987,570

Tax Anticipation Notes Payable4-10 (15) 500,000 4-10 (2) 500,000


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4/30/2014 Bal. -0-Fund Balance Nonspendable

Fund Balance Unassigned ____Inventory of Supplies _5/1/2013 Bal. 298,130 5/1/2013 Bal. 16,100

4-10. b 212,681 4-10(17) 30004/30/2014 Bal. 510,811 4/30/2014 Bal. 19,100

Estimated Revenues ____ Encumbrances 2014__________4-10(1) 3,140,000 4-10(8) 80,000 4-10(4) 2,060,000 4-10(13) 1,988,040

4-10. b 3,060,000 4/30/2014 Bal. 71,960

Appropriations Encumbrances Outstanding 2014___4-10. b 3,100,000 4-10(1) 3,100,000 4-10(13) 1,988,040 4-10(4) 2,060,000

4/30/2014 Bal. 71,960Budgetary Fund Balance

4-10(8) 80,000 4-10(1) 40,0004-10. b 40,000

Solution Chap 2 and 3

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