Question

EX. 3-3

A county engages in basic transactions.

Kilbourne County engaged in the following transactions in summary form during its fiscal year. All amounts are in millions. You need not be concerned with the category of funds balances to which reserves for encumbrances are classified on the fund balance sheet.

1. Its commissioners approved a budget for the current fiscal year. It included total revenues of $860 and total appropriations of $850.
2. It ordered office supplies for $20.
3. It incurred the following costs, paying in cash:

   Salaries	$610
   Repairs	$ 40
   Rent	$ 25
   Utilities	$ 41
   Other operating costs	$119

4. It ordered equipment costing $9.
5. It received the equipment and was billed for $10, rather than $9 as anticipated.
6. It received the previously ordered supplies and was billed for the amount originally estimated. The county reports the receipt of supplies as expenditures; it does not maintain an inventory account for supplies.

7. It earned and collected revenues of $865.

   1. Prepare journal entries as appropriate.
   2. Prepare closing entries as appropriate.
   3. What would have been the difference in the year‐end financial statements, if any, had the county not made the budgetary entries?

Answer 1

No. 1) Accounts Estimated Revenues Fund Balances Debit $ 860 Credit $ 860 Fund Balances Appropriation 850 850 Encumbrances Reserve for Encumbrances 3) 610 Salaries Expense Repairs Expense Rent Expense Utilities Expense Other Operating Expenses Cash Encumbrances Reserve for Encumbrances Reserve for Encumbrances Encumbrances Equipment Expenditure Accounts Payable

Reserve for Encumbrances Encumbrances 20 20 Supplies Expenditure B Accounts Payable 7(a) 865.. Cash Revenue 865 Closing Entries 850 Appropriation. Fund Balances Estimated Revenues 10 860 (ii 865 Revenues Fund Balances 865