Question

Following is a selection of improperly recorded transactions that occurred during 2012 and a description of how each transaction was recorded by a township. Prepare the necessary entries to correct these mistakes. Also, identify the fund(s) involved. Closing entries are not required. If no entry is required, indicate “None.” The books for the current year, 2012, have not been closed.
1. The governing board adopted a budget for the General Fund for 2012 that included estimated revenues of $ 900,000, estimated other financing sources of $ 200,000, appropriations of $ 800,000, and estimated other financing uses of $ 150,000. The budget was not recorded in the books.
2. The township purchased a fire truck in February. The bookkeeper made the following entry in the General Fund:
Fire truck .......... 125,000
Vouchers payable...... 125,000
The voucher was paid, but the payment was not recorded.
3. A property tax was levied in March. The total levy was $ 500,000. Approximately 3 percent was expected to be uncollectible. By the end of the year $ 390,000 had been collected, and the remainder was delinquent. The only entries made during the year were for the collections as a debit to Cash and credit to Revenues— property taxes.
4. Bonds were retired in June 2012. The township accumulated $ 505,000 in a Debt Service Fund by the end of 2012. Part of these resources ($ 500,000) was used to retire the bonds. The remain-der was available to be used by the township in any way it desired. The only entries recorded in the Debt Service Fund during the year were as follows:
Bonds payable.......... 500,000
Vouchers payable.......... 500,000
Vouchers payable.......... 500,000
Cash .............. 500,000
5. Some surplus equipment was sold in September for $ 20,000 (with no restrictions on the use of these resources). The equipment was originally purchased for $ 245,000 several years ago. The following entry was made in the General Fund:
Cash .................. 20,000
Loss on sale of equipment ........ 225,000
Equipment ............... 245,000
6. The General Fund made its annual contribution to a Debt Service Fund. These resources will be used to pay interest. The only entry made was in the General Fund:
Bonds payable.......... 100,000
Cash ............... 100,000
7. The interest paid out of the Debt Service Fund during 2012 on the debt mentioned in transaction 6 was mistakenly recorded in the General Fund as follows:
Interest expense.......... 100,000
Cash............... 100,000



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  • CreatedDecember 30, 2014
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