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

Presented below are a number of transactions for the City of Bingham that occurred during the 2023 fiscal year; the year for which the budget given in Chapter 3 was recorded. Read all instructions carefully.

[Para. 4a-1] Property taxes were levied in the amount of $7,750,000.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. Type 4a-1 as the paragraph number in the [Add description] box for this entry; 4a-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. 4a-2] Tax anticipation notes were issued in the amount of $500,000.

Required:Record the issuance of this note in both the General Fund and governmental activities general journals.

[Para. 4a-3] Purchase orders, contracts, and other commitment documents were issued in the following amounts for the following functions:

General Government $395,000

Public Safety 1,055,000

Public Works 980,750

Health and Welfare665,725

Culture and Recreation 625,125

Miscellaneous98,000

Total $3,819,600

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. 4a-4] Grant funds of $25,000 recorded as Deferred Inflows of Resources at the end of FY 2022 were recognized as revenue when timing requirements were met.

Required:Record the revenue in both the General Fund and governmental activities general journals by debiting Deferred Inflows of Resources and crediting Revenue.Select "Previous Deferral" in the drop down [Description] menu in the Detail Journal. (This amount was included in the budget as Intergovernmental Revenue in the General Fund.)At the government-wide level the grant funds should be classified as Program Revenues-Health and Welfare-Operating Grants and Contributions.

[Para. 4a-5] The General Fund paid $245,654 on the vouchers payable that were outstanding at the end of FY 2022.

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

[Para. 4a-6] The General Fund collected the following receivable amounts in cash:

Current year Property Taxes$7,302,000

Delinquent Taxes 378,000

Interest and Penalties Receivable on Taxes22,860

Sales Taxes768,000

Total$8,470,860

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 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.

[Para. 4a-7] The General Fund collected the following amounts in cash:

Licenses and Permits 479,000

Fines and Forfeits519,000

Intergovernmental Revenues520,500

Charges for Services385,750

Miscellaneous Revenues220,500

Total$2,124,750

Required:Record the receipt of cash and additions to 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.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 $200,000 and by Public Safety departments in the amount of $319,000. Intergovernmental Revenues should be credited to "Program RevenuesGeneral GovernmentOperating Grants and Contributions."

[Para. 4a-8] The General Fund paid the $19,400 reported as Due to Other Funds at the end of FY 2022.This amount was reported as Internal Payables to Business-type Activities at the government-wide level. Do not record this transaction in the Water Utility Fund until instructed to do so in Chapter 7 of this case.

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

[Para. 4a-9] Delinquent taxes receivable in the amount of $18,000 were written off as uncollectible. Interest and penalties accrued on these taxes in the amount of $1,350 were also written off.

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

[Para. 4a-10] General Fund payrolls for the year totaled $6,673,038. Of that amount, $1,020,975 was withheld for employees' federal income taxes; $1,134,416 for federal payroll taxes; $381,760 for employees' state income taxes; $420,296 for retirement funds administered by the state government; and the remaining $3,715,591 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$2,200,376

Public Safety2,731,644

Public Works790,481

Health and Welfare501,673

Culture and Recreation 448,864

Total$6,673,038

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

[Para. 4a-11] Invoices for some of the goods and services ordered in transaction 4a-3 were received and vouchered for later payment. Select "Elimination" in the drop down [Description] menu in the Detail Journal:

Actual Estimated

General Government $394,940 $393,060

Public Safety 1,047,650 1,049,500

Public Works 964,300 965,620

Health and Welfare 661,200 663,600

Culture and Recreation 615,750 617,000

Miscellaneous98,000 98,000

Totals $3,781,840 $3,786,780

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 $125,000 of playground equipment ordered by Culture and Recreation and $400,000 worth of vehicles for Public Safety. The equipment and vehicles meet the city's threshold for capitalization (debit Equipment for these items at the government-wide level). Record expenditures charged to the miscellaneous appropriation as General Government expenses at the government-wide level.

[Para. 4a-12] The General Fund paid vouchers during the year in the amount of $3,515,000 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. 4a-13] The General Fund transferred $75,000 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. 4a-14] Tax anticipation notes issued by the General Fund were paid at maturity at the face amount plus interest of $10,000.

Required:Record the payment of these items in both the General Fund and governmental activities general journals.For the General Fund charge Miscellaneous for the interest expenditure.At the government-wide level, debit ExpensesInterest on Tax Anticipation Notes.

[Para. 4a-15] The General Fund recorded liabilities of $35,000 to other funds for services received from the Water Utility Fund during the year. Of this amount, $23,500 should be charged to Public Safety and $11,500 to General Government.

Required:Record the receipt of these services and the associated liability in the General Fund and governmental activities journals.At the government-wide level the liability should be credited to Internal Payables to Business-type Activities.Do not record these items in the Water Utility Fund until instructed to do so in Chapter 7 of this case.

[Para. 4a-16] The year-end balance of supplies inventory is $7,000.

Required:Adjust the inventory of supplies account in both the General Fund and governmental activities journals.At the government-wide level expenses in General Government can be reduced by $7,000.In the General Fund, fund balance should be classified as nonspendable.

[Para. 4a-17] 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. 4a-18] Interest and penalties of $59,580 were recorded on delinquent taxes, of which $10,750 was estimated to be uncollectible.Sales taxes receivable of $21,722 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. 4a-19] 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$7,500 increase

Licenses and Permits 6,000 decrease

Fines and Forfeits 4,000 increase

Appropriations:

Culture and Recreation $3,000 decrease

Public Works 5,000 decrease

General Government4,000 increase

Miscellaneous3,000 increase

Required:Record the budget amendments in the General Fund general journal only.Budgetary items do not affect the government-wide accounting records. 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.