Following the instructions in the next paragraph, prepare and post the necessary entries to close the Estimated
Question:
Following the instructions in the next paragraph, prepare and post the necessary entries to close the Estimated Revenues and Appropriations accounts to Budgetary Fund Balance, and Revenues and Expendituresto Fund Balance—Unassigned. Because the City of Smithville honors all outstanding encumbrances at year-end, it is not necessary to close Encumbrances to Encumbrances Outstanding at year-end since encumbrances do not affect the General Fund balance sheet or statement of revenues, expenditures, and changes in fund balances. If, however, you would like to avoid having these accounts appear in the post-closing trial balance, you can opt to close Encumbrances to Encumbrances Outstanding. If the accounts are closed, they would need to be reestablished at the beginning of the next year.
To close the temporary accounts, you must click on the check mark for [Closing Entry], “Closing Entry” will appear in the [Transaction Description] box. Be sure the check mark in the box for [Closing Entry] is showing before closing each individual account. Also, you will be sent to the Detail Journal where you must close each individual budgetary or operating statement account. To determine the closing amounts for both General Ledger and subsidiary ledger accounts, you will need to first save and print the pre-closing version of these ledgers for year 2017 from the [Reports] menu.
At year-end, an analysis by the city’s finance department determined the following constraints on fund balances in the General Fund. Prepare the appropriate closing/reclassification journal entry in the General Fund to reclassify amounts between Fund Balance—Unassigned and the fund balance accounts corresponding to the constraints shown below. (Note: You should consider the beginning of year balances in fund balance accounts in calculating the amounts to be reclassified. Be sure the check mark in the box for [Closing Entry] is showing before closing each individual account.)
Account Ending Balance
Fund Balance—Committed—General Government $30,000
Fund Balance—Restricted—Public Safety 36,000
Fund Balance—Committed—Public Works 12,700
Fund Balance—Assigned—Culture and Recreation 0
Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL ACTIVITIES AT THIS TIME since governmental activities will not be closed until Chapter 9, after the capital projects fund (Chapter 5) and debt service fund (Chapter 6) transactions affecting governmental activities at the government-wide level have been recorded.
b. Select [Export] from the drop down [File] menu to create an Excel worksheet of the General Fund post-closing trial balance as of December 31, 2017. Use Excel to prepare in good form a balance sheet for the General Fund as of December 31, 2017. Follow the format shown in Illustration 4-3 of Reck andLowensohn, Accounting for Governmental & Nonprofit Entities, 17th edition textbook (hereafter referred to as “the textbook.”)
c. Select [Export] from the drop down [File] menu to create an Excel worksheet of the General Fund pre-closing subsidiary ledger account balances for the year 2017. Use Excel to prepare in good form a statement of revenues, expenditures, and changes in fund balance for the General Fund for the year ended December 31, 2017. (See Illustration 4-4 in the textbook for an example format.)
d. Use the Excel worksheet of the General Fund pre-closing subsidiary ledger account balances created in part c above to prepare in good form a schedule of revenues, expenditures, and changes in fund balance—budget and actual for the General Fund for the year ended December 31, 2017. (See Illustration 4-5 in the textbook for an example format.)
e. Prepare a reconciliation of total expenditures reported in your solution to part c of this problem with the total expenditures and encumbrances reported in your solution to part d of this problem. (In Chapter 4below Illustration 4-5, see discussion and example which compares Illustrations 4-4 and 4-5.)
City of Smithville | |||
General Fund | |||
Post-Closing Trial Balance | |||
For year 2017 | |||
Debits | Credits | ||
Cash | $268,302 | ||
Taxes Receivable—Current | 169,465 | ||
Taxes Receivable—Delinquent | 23,906 | ||
Allowance for Uncollectible Delinquent Taxes | $109,730 | ||
Interest and Penalties Receivable on Taxes | 16,840 | ||
Allowance for Uncollectible Interest and Penalties | 15,226 | ||
Due From State Government | 115,000 | ||
Vouchers Payable | 563,973 | ||
Due to Other Funds | 572,777 | ||
Due to Federal Government | 8,850 | ||
Due to State Government | 3,413 | ||
Fund Balance—Restricted—Public Safety | 15,000 | ||
Fund Balance—Committed—Public Works | 29,700 | ||
Fund Balance—Assigned—Culture and Recreation | 56,800 | ||
Fund Balance—Unassigned | 351,623 | ||
Budgetary Fund Balance | 43,130 | ||
Encumbrances Outstanding | 35,280 | ||
Estimated Revenues | 3,209,070 | ||
Revenues | 3,210,364 | ||
Appropriations | 3,247,200 | ||
Expenditures | 3,210,997 | ||
Encumbrances | 35,280 | ||
Totals for all accounts | $7,655,963 | $7,655,963 |
City of Smithville | |||||
General Fund | |||||
Operating Statement Account Balances | |||||
For year 2017 | |||||
Estimated Revenues | Revenues | Balance | |||
Acct 3/4020 | Taxes—Real Property | $1,679,070 | $1,679,070 | $0 | |
Acct 3/4040 | Interest and Penalties on Taxes | 9,000 | 7,500 | 1,500 | |
Acct 3/4050 | Licenses and Permits | 600,000 | 601,314 | (1,314) | |
Acct 3/4060 | Fines and Forfeits | 410,000 | 410,660 | (660) | |
Acct 3/4070 | Intergovernmental Revenue | 275,000 | 275,000 | 0 | |
Acct 3/4080 | Charges for Services | 236,000 | 236,820 | (820) | |
Encumbrances Dr(Cr) | Expenditures Dr(Cr) | Appropriations Cr(Dr) | Available Balance Cr(Dr) | ||
Acct 5/6/7020 | $3,701 | $612,798 | $617,200 | $701 | |
Acct 5/6/7030 | 7,639 | 1,417,853 | 1,425,600 | 108 | |
Acct 5/6/7040 | 23,163 | 783,355 | 806,600 | 82 | |
Acct 5/6/7060 | 777 | 396,991 | 397,800 | 32 |
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim