Chapter 4 Recording Operating Transactions Affecting the General Fund and Governmental Activities at the Government-wide Level

[Para. 4-a-1] Property taxes were levied in the amount of $3,500,000. It is estimated that 1 percent of the tax will be uncollectible.

Required: Record this transaction in both the General Fund and governmental activities journal. Record the tax levy as a revenue in both journals; you will adjust for unavailable revenues at year end. (Note: Type 4-a-1 as the paragraph number in the [Add Description] box for this entry; 4-a-2 for the next transaction, etc. Careful referencing by paragraph number is very helpful should you need to determine where you may have omitted a required journal entry or made an error.) Select Accrued Revenue in the drop down [Description] menu in the Detail Journal related to the General Fund entry.

[Para. 4-a-2] Purchase orders, contracts, and other commitment documents were issued in the following amounts for the following functions:

General Government	$695,000
Public Safety	675,000
Public Works	615,000
Culture and Recreation	77,500
Total	$2,062,500

Required: Record the encumbrances in the General Fund general journal and Detail Journal as appropriate. In the Detail Journal, select Purchase Orders from the drop down [Description] menu.

[Para. 4-a-3] The General Fund collected the following receivable amounts in cash:

Current Property Taxes	$3,395,000
Delinquent Taxes	120,000
Interest and Penalties Receivable on Taxes	9,860
Sales Taxes	319,562
Licenses and Permits	238,000
Fines and Forfeits	210,250
Intergovernmental Revenues	250,000
Charges for Services	109,500
Total	4,652,172

Required: Record the receipt of cash and the related credits to receivables and revenues accounts, as applicable, in both the General Fund and governmental activities journals. (Select Received in Cash in the drop down [Description] menu in the Detail Journal related to the General Fund revenue entries.) Sales taxes exceeding the sales taxes receivable balance should be recorded as revenues.

In addition to the cash collection, remember to recognize revenue in the General Fund for the full amount of the delinquent taxes and interest and penalties collected by reducing the deferred inflows of resources balance. These revenues were not expected to be collected within 60 days of year end, thus they were not considered available under the modified accrual basis of accounting and were classified as Deferred Inflows of Resources in the General Fund. Select Previous Deferral in the drop down [Description] menu in the Detail Journal.

For governmental activities at the government-wide level, all Licenses and Permits and Charges for Services were attributable to the General Government function as Program Revenue-Charges for Services. Fines and forfeits were collected by General Government departments in the amount of $100,000 and by Public Safety departments in the amount of $110,250. Intergovernmental Revenues should be credited to Program RevenuesGeneral GovernmentOperating Grants and Contributions.

[Para. 4-a-4] Delinquent taxes receivable in the amount of $9,000 were written off as uncollectible. Interest and penalties accrued on these taxes in the amount of $1,050 were also written off.

Required: Record the writeoffs in both the General Fund and governmental activities general journals.

[Para. 4-a-5] General Fund payrolls for the year totaled $2,561,177. Of that amount, $300,737 was withheld for federal payroll taxes; $98,280 for employees state income taxes; $196,560 for retirement funds administered by the state government; and the remaining $1,965,600 was paid to employees in cash. The City of Bingham does not record encumbrances for payrolls. The payrolls were chargeable against the following functions appropriations:

General Government	$ 916,000
Public Safety	1,316,000
Public Works	249,750
Culture and Recreation	79,427
Total	$2,561,177

Required: Make summary journal entries for payroll in both the General Fund and governmental activities general journals for the year.

[Para. 4-a-6] Invoices for some of the goods and services ordered in transaction 4-a-3 were received and vouchered for later payment. (Select Elimination in the drop down [Description] menu in the Detail Journal):

	Actual	Estimated
General Government	$ 689,000	$ 689,500
Public Safety	650,800	650,800
Public Works	612,425	612,400
Culture and Recreation	77,490	77,500
Total	$2,029,715	$2,030,200

Required: Record the receipt of these goods and the related vouchers payable in both the General Fund and governmental activities journals. At the government-wide level, you should assume the city uses the purchases inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except for $225,000 of vehicles ordered by Public Safety and $300,000 of equipment ordered by Public Works. The vehicles and equipment meet the citys threshold for capitalization (debit Equipment for this item at the government-wide level).

[Para. 4-a-7] The General Fund paid vouchers during the year in the amount of $2,117,627 as well as its liabilities for employees federal and state income taxes withheld and payroll taxes.

Required: Record the payment of these items in both the General Fund and governmental activities general journals.

[Para. 4-a-8] The General Fund transferred $20,000 to the debt service fund for a bond interest payment.

Required: Record this transaction in the General Fund only. The transaction has no effect at the government-wide level since it occurs between two governmental activities. Do not record this transaction in the debt service fund until instructed to do so in Chapter 6 of this case.

[Para. 4-a-9] The balances in the current taxes receivable and related estimated uncollectibles accounts were reclassified as delinquent.

Required: Record the reclassification in the General Fund and governmental activities journals. Property tax revenues should be reduced and Deferred Inflows of Resources should be recorded in the General Fund, since these revenues are considered unavailable under the modified accrual basis of accounting used in governmental funds. At the government-wide level, the property taxes continue to be included in current year revenue.

[Para. 4-a-10] Interest and penalties of $1,580 were recorded on delinquent taxes, of which $158 was estimated to be uncollectible. Sales taxes receivable of $11,250 were also recorded.

Required: Interest and penalties should be recorded as Deferred Inflows of Resources, rather than interest and penalties revenue, in the General Fund. On the other hand, sales taxes are recorded as revenue in the General Fund since they will be collected shortly after year end. At the government-wide level, both the interest and penalties and sales taxes are recorded as current year revenue.

[Para. 4-a-11] In view of unexpected revenue and expenditure developments the city council revised the budgets for the current year as shown below:

	Budget Adjustments
Estimated Revenues:
Property Tax	$15,000 increase
Sales Tax	3,750 decrease
Interest and Penalties	1,000 decrease

Appropriations:
Culture and Recreation	$ 2,000 decrease
Public Safety	6,000 decrease
General Government	4,500 decrease

Required: Record the budget amendments in the General Fund general journal only. Budgetary items do not affect the government-wide accounting records. (Note: Select Budget Amendment in the [Description] field in the Detail Journal.)

Post all journal entries to the general and subsidiary ledgers: After reviewing all entries for accuracy, including year and paragraph numbers, post all entries to the general ledger accounts and to all subsidiary ledger accounts, by clicking on [Post entries]. Also post all entries in the governmental activities journal.

Closing Entry. Following the instructions in the next paragraph, prepare and post the necessary entries to close the Estimated Revenues, Appropriations, and Estimated Other Financing Uses accounts to Budgetary Fund Balance; and Revenues, Expenditures, and Other Financing Uses to Fund BalanceUnassigned. Because the City of Bingham 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. However, if 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, although entries are not required in this problem for the next year.

To close the temporary accounts, you must click on the box for [Closing Entry], Closing Entry checkbox will appear next to the [Add credit] field. Be sure the checkmark in the box for [Closing Entry] is showing as selected before closing each individual account. Also, with the exception of Estimated Other Financing UsesInterfund Transfers Out and Other Financing UsesInterfund Transfers Out, 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 should first print the pre-closing version of these ledgers for year 2023 from the [Reports] menu.

At year-end, an analysis by the citys finance department determined the following constraints on resources in the General Fund. Prepare the appropriate journal entry in the General Fund to reclassify amounts between Fund BalanceUnassigned 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.)

Account	Amount
Fund BalanceCommittedPublic Safety	$20,300
Fund BalanceAssigned Public Works	19,500

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.

Select [Export] from the drop down [File] menu to create an Excel or other worksheet of the General Fund post-closing trial balance as of December 31, 2023. Use Excel to prepare in good form a balance sheet for the General Fund as of December 31, 2023. Follow the format shown in Illustration 4-4 of Reck, Lowensohn, and Neely, Accounting for Governmental and Nonprofit Entities, 19th edition textbook (hereafter referred to as the textbook.)

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 2023. Use Excel to prepare in good form a statement of revenues, expenditures, and changes in fund balances for the General Fund for the year ended December 31, 2023. (See Illustration 4-5 in the textbook for an example format.)

Refer to the General Fund pre-closing subsidiary ledger account balances found in part c above to prepare in good form a statement of revenues, expenditures, and changes in fund balancesbudget and actual for the General Fund for the year ended December 31, 2023. (See Illustration 4-6 in the textbook for an example format.)

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. (See example in Chapter 4 of the textbook which compares Illustrations 4-5 and 4-6.)

[Note: File the printouts of all your exported or printed documents and your completed financial statements in your cumulative problem folder until directed by your instructor to submit them, unless your instructor specifies submission of files electronically.]

Before closing the City of Bingham it is recommended that you save a backup copy of your work to another location by clicking on [File] and [Save As] for Windows and Mac.