Computing Available Funds As the newly-hired assistant controller for the City of Columbia, Missouri, you are working diligently to unravel the mysteries of governmental accounting. On your desk this morning is a memorandum from the controller asking you to advise her of the amount of available funds. After consulting your assistant and the city treasurer, you begin to analyze the following information.
(in thousands) Dr (Cr)
Cash in bank $ 40,000
Estimated revenue 4,000,000
Budgetary surplus (200,000)
Revenue (3,700,000)
Expenditures 2,500,000
Accounts payable (300,000)
Fund balance-assigned (225,000)
Fund balance-unassigned (800,000)
Assigned fund balance consists of outstanding encumbrances.
Required
a. Calculate the funds available to be encumbered.
b. Suppose it is now August 31, close to the September 30 fiscal year-end. Operating costs occur evenly throughout the year. Do you expect to see an effort to cut next period's budget? Why?