Review the budget note to the City of Raleigh s nancial
Review the budget note to the City of Raleigh’s financial statements presented in the previous problem. Assume that the city engaged in the following transactions in 2014 and 2015:
• In 2014 it signed a service contract with a private security company. The company agreed to provide security services to the city for one year at a cost of $72,000 ($6,000 per month). By year-end the company provided, and the city paid for, services for three months.
• In 2015, the company performed, and the city paid for, the remaining nine months of the contract. However, because of agreed-upon changes in the services provided by the company, the total charges for 2015 were reduced from $54,000 to $50,000.
1. The city properly budgeted for the services and appropriated the funds consistent with policies set forth in the note. Prepare all budgetary, encumbrance, and expenditure entries relating to the service contract that would be required in 2014 and 2015. In 2014, when the city signed the contract, it appropriated the entire $72,000. Then, at the start of 2015, in as much as the city expended only $18,000 in 2014, it re-appropriated $54,000.
a. Assume first that the contract was accounted for in Raleigh’s general fund.
b. Assume next that it was accounted for in a capital projects fund established for the construction of its Walnut Creek Amphitheatre. The city prepares annual financial statements for capital projects funds, but it does not close out its accounts. Moreover, it prepares budgets for the entire project, not for particular periods. The project was started in 2014 and completed in 2015.
2. Justify the city’s practice of accounting differently for commitments in the two types offunds.
Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
Relevant Tutors available to help