Question

You have been engaged by the Town of Rego to examine its June 30, 20X8, balance sheet. You are the first CPA to be engaged by the town and find that acceptable methods of municipal accounting have not been employed. The town clerk stated that the books had not been closed and presented the following preclosing trial balance of the General Fund as of June 30, 20X8:


Additional Information:
1. The estimated losses of $18,000 for current taxes receivable were determined to be a reasonable estimate. Current taxes become delinquent on June 30 of each year.
2. Included in the Revenues account is a $27,000 credit representing the value of land donated by the state as a grant-in-aid for construction of a municipal park.
3. The Building Addition account balance is the cost of an addition to the town hall building. This addition was constructed and completed in June 20X8. The payment was recorded in the General Fund as authorized.
4. The Serial Bonds Paid account reflects the annual retirement of general obligation bonds issued to finance construction of the town hall. Interest payments of $7,000 for this bond issue are included in Expenditures.
5. Operating supplies ordered in the prior fiscal year ($8,800) were received, recorded, and consumed in July 20X7. (Encumbered appropriations lapse one year after the end of the fiscal year for which they are made.)
6. Outstanding purchase orders at June 30, 20X8, for operating supplies totaled $2,100. These purchase orders were not recorded in the accounts. The purchase will be completed using financial resources available for general purposes.
7. The special assessment bonds are guaranteed by the town of Rego and were sold in June 20X8 to finance a street-paving project. No contracts have been signed for this project and no expenditures have been made.
8. The balance in the Revenues account includes credits for $20,000 for a note issued to a bank to obtain cash in anticipation of tax collections. The note was still outstanding at June 30, 20X8.
9. The fund balance account has been adjusted for the difference between Estimated Revenues and Appropriations.

Required
a. Prepare the formal adjusting and closing journal entries (budgetary and actual) for the General Fund for the fiscal year ended June 30, 20X8.
b. The foregoing information disclosed by your examination was recorded only in the General Fund even though other funds or accounts were involved. Prepare the formal adjusting journal entries for any other funds or GCA-GLTL accounts involved.
(AICPA,adapted)


$1.99
Sales0
Views103
Comments0
  • CreatedOctober 25, 2014
  • Files Included
Post your question
5000