This problem is based on the information about the Murphy County General Fund budgeted and actual transactions and events described in Problem 4-2.

In Problem 4-2, The Murphy County Commissioners adopted the following General Fund budget for the 20X8 fiscal year:

Murphy County

General Fund

Budget—20X8

Estimated Revenues: 

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 8,000,000

Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000

Intergovernmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000

Charges for Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

Fines and Forfeits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000

  12,000,000

Appropriations: 

General Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000

Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000

Highways and Streets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000

Health and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000

Culture and Recreation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000

  11,900,000

Excess of Estimated Revenues over Appropriations . . . . . . . . 100,000

Fund Balance—Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000

Fund Balance—Ending (Anticipated) . . . . . . . . . . . . . . . . . . $ 1,500,000

The following events occurred during 20X8:

1. Purchase orders issued and contracts let were expected to cost:

General Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000

Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000

Highways and Streets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000

Health and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000

Culture and Recreation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .300,000

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200,000

2. The commissioners reviewed the budget during the year and (a) revised the estimate of Intergovernmental Revenues to $1,500,000 and reduced the Public Safety and Highways and Streets appropriations by $225,000 each to partially compensate for the anticipated decline in intergovernmental revenues, and (b) increased the Health and Sanitation appropriation by $70,000 because of costs incurred in connection with an unusual outbreak of Tasmanian flu.

3. Revenues (actual) for 20X8 were

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,150,000

Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785,000

Intergovernmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,520,000

Charges for Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,000

Fines and Forfeits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395,000

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000

$ 11,560,000

4. Goods and services under purchase orders and contracts were received:

.:.

The remaining orders are still outstanding.

5. Other expenditures incurred were

General Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 700,000

Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,560,000

Highways and Streets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,271,000

Health and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485,000

Culture and Recreation . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,000

 $6,452,000

Required

1. Prepare a budgetary comparison statement for the General Fund of Murphy County for the 20X8 fiscal year. The statement should present revenues (by source category), expenditures and encumbrances (by function), and the excess of revenues over (under) expenditures and encumbrances. Use these column headings:

Original Budget

Revised Budget

Actual

Variance—Favorable (Unfavorable)

Assume that no encumbrances were outstanding at the beginning of 20X8.

2. Because encumbrances do not constitute expenditures, some governmental fund budgetary comparison statements omit data on encumbrances.

(a) If no encumbrances were outstanding at the beginning of 20X8, what effects would omission of encumbrances data have on the Murphy County General Fund budgetary comparison statement for the 20X8 fiscal year?

(b) In what circumstances would including or excluding encumbrances data mislead users of a governmental fund budgetary comparison statement?