Question

M 17-1 Journal Entries, Closing Entries, and Trial Balance LOS The general ledger trial balance of the General Fund of the City of Bedford on January 1, 2015, shows the following: Cash S100,000 Taxes Receivable 75.000 Allowance for Uncollectible Taxes $ 35.000 Fund Balance-Assigned (encumbrances from 2014) 30,000 Fund Balance-Unassigned 110,000 Total $175.000 $175,000 A summary of activities and transactions for the General Fund during 2015 is presented here: 1. The City Council adopted a budget for the General Fund with estimated revenues of $1.560,000 and autho- rization for appropriated expenditures of SI.400,000. The budget authorized the transfer of $50,000 from the Water Fund to the General Fund for operating expenses as a payment in lieu of taxes. Cash for the payment of interest due for the year on the $1,000,000,8% bond issue for the Civic Center is approved for transfer from the General Fund to the Debt Service Fund. 2. The annual property tax levy of 10% on assessed valuation ($11.000.000) is billed to property owners. Two percent is estimated to be uncollectible. 3. Goods and services amounting to $1,150,000 were ordered during the year. 4. Invoices for all goods ordered in 2014 amounting to $29,000 were approved for payment. 5. Funds for bond interest on Civic Center bonds were transferred to the Debt Service Fund, 6. Invoices for goods and services received during the year totaling $1,155,000 were recorded. These were encumbered previously see (3) abovel. 7. Transfer of funds from the Water Company was received in lieu of taxes. 8. Taxes were collected from property owners in the amount of $1,050,000. 9. Past-due tax bills of $17.000 were charged off as uncollectible. 10. Checks in payment of invoices for goods and services ordered in 2014 and 2015 were issued see items (4) and (6) above). 11. Revenues received from miscellaneous sources, other than property taxes, of $455,000 were recorded 12. Purchase order for two trash collection vehicle systems complete with residence trash containers for automatic pickup of trash was issued. Bid price per system was $120.000 Chapter 17 Introduction to Fund Accounting Required: A. Prepare journal entries to record the summary transactions. You may find it necessary or convenient to post journal entries to ledger l-accounts before the preparation of the required trial balances. B. Prepare a preclosing trial balance. C. Prepare closing entries. D. Prepare a postclosing trial balance.

Answer 1

Part A) The journal entries are provided as below: Account title and explanation Date Debit Credit 1 Estimated Revenue Appropriations $1,560,000 $1,400,000 $160,000 Unreserved Fund Balance (To record the budget) Due from Water Fund $50,000 Transfer from Water Fund $50,000 (To record the estimates of fund transfer) Transfer to Debt Service Fund $80,000 (1,000,000*8%) $80,000 Due to Debt Service Fund (To record the estimates of fund transfer) 2 Property Tax Receivable (11,000,000* 10% ) $1,100,000 $1,078,000 Revenue Allowance for Uncollectible Taxes $22,000 (11,000,000* 2%) (To record the revenue) 3 Encumbrances $1,150,000 $1,150,000 Reserve for Encumbrances (To record the estimates of order) 4Expenditures 2014 Vouchers Payable (To record the approval of payment on |асcount) $29,000 $29,000 5 Due to Debt Service Fund (1,000,000*8%) $80,000 $80,000 Cash (To record the transfer of fund for interest to debt service fund)

6 Expenditures Vouchers Payable |(To record the expenditures) $1,155,000 $1,155,000 Reserve for Encumbrances S1,150,000 $1,150,000 Encumbrances (To record the reversal of encumbrance account) 7 Cash $50,000 $50,000 Due from Water Fund (To record the transfer of fund from water fund) 8 Cash S1,050,000 Property Tax Receivable (To record the collection of revenue) $1,050,000 9 Allowance for Uncollectible Taxes Property Tax Receivable (To record charge off past tax bill as uncollectable) $17,000 $17,000 10Vouchers Payable (29,000 1,155,000) $1,184,000 Cash $1,184,000 (To record charge off past tax bill as uncollectable) $455,000 11 Cash $455,000 Revenue (To record the receipt of revenue from misceliounius sources) 12 Encumbrances (120,000*2) S240,000 $240,000 Reserve for Encumbrances (To record reserve for expense)

Part B) The reclosing trial balance is prepared as follows: CITY OF BEDFORD General Fund Pre closing Trial Balance 31-Dec-15 Particulars Debit Credit Cash 391,000 Property Tax Receivable Encumbrances Estimated Revenue Transfer to Debt Service Fund Expenditures 2014 Expenditures Allowance for Uncollectible Taxes Unreserved Fund Balance Reserve for Encumbrances - 2014 Reserve for Encumbrances Revenue Appropriations Transfer from Water Fund Total 108,000 240,000 1,560,000 80,000 29,000 1,155,000 40,000 270,000 30,000 240,000 1,533,000 1,400,000 50,000 $3,563,000 S3,563,000

Part C) The closing entries are provided as follows: Account title and explanation Date Debit Credit 1 Revenue Unreserved Fund Balance $1,533,000| $27,000 $1,560,000 Estimated Revenue 2 Appropriations Expenditures $1,400,000 $1,155,000 $240,000 $5,000 Encumbrances Unreserved Fund Balance 3Transfer from Water Fund Unreserved Fund Balance $50,000 $30,000 $80,000 Transfer to Debt Service Fund 4Reserve for Encumbrances - 2014 Expenditures 2014 $30,000 $29,000 Unreserved Fund Balance S1,000

Part D) The post closing trial balance is prepared as below: CITY OF BEDFORD General Fund Post closing Trial Balance 31-Dec-15 Debit Particulars Credit Cash 391,000 Property Tax Receivable Allowance for Uncollectible Taxes Unreserved Fund Balance (270,000 27,000 5,000 30,000 1,000) Reserve for Encumbrances Total 108,000 40,000 219,000 240,000 $499,000 $499,000|