Question

The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2020:

1. Beginning balances were: Cash, $97,000; Taxes Receivable, $195,500; Accounts Payable, $55,250; and Fund Balance, $237,250.
2. The budget was passed. Estimated revenues amounted to $1,270,000 and appropriations totaled $1,266,600. All expenditures are classified as General Government.
3. Property taxes were levied in the amount of $935,000. All of the taxes are expected to be collected before February 2021.
4. Cash receipts totaled $905,000 for property taxes and $307,500 from other revenue.
5. Contracts were issued for contracted services in the amount of $102,250.
6. Contracted services were performed relating to $91,500 of the contracts with invoices amounting to $89,100.
7. Other expenditures amounted to $981,500.
8. Accounts payable were paid in the amount of $1,122,500.
9. The books were closed.

Required:
a. Prepare journal entries for the above transactions.
b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund.
c. Prepare a Balance Sheet for the General Fund assuming there are no restricted or assigned net resources and outstanding encumbrances are committed by contractual obligation.

JOURNAL ENTRIES THAT NEED TO BE MADE

1 Beginning balances were: Cash, $97,000; Taxes Receivable, $195,500; Accounts Payable, $55,250; and Fund Balance, $237,250. 2 The budget was passed. Estimated revenues amounted to $1,270,000 and appropriations totaled $1,266,600. All expenditures are classified as General Government. 3 Property taxes were levied in the amount of $935,000. All of the taxes are expected to be collected before February 2021. 4 Cash receipts totaled $905,000 for property taxes and $307,500 from other revenue.

Answer 1

Solution

Part 1

No.	General journal	Debit ($)	Credit ($)
1	No journal entry required
2	Estimated revenues control	12,70,000
	Appropriations control		12,66,600
	Budgetary fund balance		3,400
3	Taxes receivable- current	9,35,000
	Revenues control		9,35,000
4	Cash	12,12,500
	Revenues control		3,07,500
	Taxes receivable- current		9,05,000
5	Encumbrances control	102,250
	Budgetary fund balance - reserve for encumbrances		102,250
6	Budgetary fund balance - reserve for encumbrances	91,500
	Encumbrances control		91,500
	Expenditures control	89,100
	Accounts payable		89,100
7	Expenditures control	9,81,500
	Accounts payable		9,81,500
8	Accounts payable	11,22,500
	Cash		11,22,500
9	Appropriations control	12,66,600
	Budgetary fund balance	3,400
	Estimated revenues control		12,70,000
	Budgetary fund balance - reserve for encumbrances	10,750
	Encumbrances (102,250-91,500)		10,750
	Revenues control (9,35,000+307,500)	12,42,500
	Expenditures control (9,81,500+89,100)		10,70,600
	Fund balance (12,42,500-10,70,600)		171,900

Part 2

General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance For the Year Ended December 31
Revenues:	($)	($)
Property Taxes		9,35,000
Other Revenues		3,07,500
Total Revenues		12,42,500
Expenditures:
General Government: Contracted Services	981,500
Other	89,100
Total Expenditures		10,70,600
Revenues over (under) expenditures		171,900
Fund Balance, January 1		237,250
Fund Balance, December 31		409,150

Part 3

Balance Sheet General Fund As of December 31
Assets	($)	($)
Cash (97,000+12,12,500-11,22,500)		187,000
Taxes receivable, net (195,500+9,35,000-9,05,000)		225,500
Total assets		4,12,500
Liabilities and Fund Balance Liabilities
Liabilities
Accounts payable (55,250+89,100+981,500-11,22,500)		3,350
Total Liabilities
Fund Balance:
Committed for Contract Services	10,750
Unassigned (409,150-10,750)	398,400
Total Fund Balance		409,150
Total Liabilities and Fund Balances		412,500

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