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 2017 fiscal year; the year for which the budget given in Chapter 3 was recorded. Read all instructions carefully. a. After opening the data file containing your data from Chapters 2 and 3 of this project, record the following transactions in the general journal for the General Fund and, if applicable, in the general journal for governmental activities at the government-wide level. For all entries, the date selected should be year 2017. For each of the paragraphs that requires entries in both the General Fund and governmental activities journals, you can either record them in both journals on a paragraph-by-paragraph basis or, alternatively, record all the General Fund journal entries first for all paragraphs, then complete the governmental activities journal entries for all paragraphs. If you choose the latter method, it might be useful to print the General Fund general journal entries to assist in making the entries in the governmental activities journal. Regardless of the method you choose, we recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck and Lowensohn textbook (17th edition) for guidance in making all entries. For each entry affecting budgetary accounts or operating statement accounts, the Detail Journal will automatically open to allow you to record the appropriate amounts in the detail budgetary or actual accounts, as was the case in Chapter 3. 1.

[Para. 4-a-1] Property taxes were levied in the amount of $6,875,000. It is estimated that 4 percent of the tax will be uncollectible. Required: Record this transaction in both the General Fund and governmental activities journal. (Note: Type 4-a-1 as the paragraph number in the [Transaction 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 [Transaction Description] menu in the Detail Journal related to the General Fund entry. 2.

[Para. 4-a-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. 3.

[Para. 4-a-3] Purchase orders, contracts, and other commitment documents were issued in the following amounts for the following functions: 20 General Government $ 533,000 Public Safety 1,650,000 Public Works 1,128,700 Culture and Recreation 650,900 Total $3,962,600 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 [Transaction Description] menu. You can also type in an alternative description, if desired. 4.

[Para. 4-a-4] The General Fund paid $385,000 on the vouchers payable that were outstanding at the end of FY 2016. Required: Record the payment of this amount in both the General Fund and governmental activities general journals. 5.

[Para. 4-a-5] $471,000 of delinquent property taxes outstanding at the end of FY 2016 were collected between January 2017 and May of 2017, together with late payment interest and penalties of $25,000 that was accrued last year. Required: Record the receipt of cash and the related credits to receivable accounts, as applicable, in both the General Fund and governmental activities general journals. Adjust Deferred Inflow of Resources-Property Taxes if necessary. 6.

[Para. 4-a-6] The General Fund collected current year real property taxes of $6,364,000 in cash, plus the following amounts in cash: Sales Taxes 748,000 Licenses and Permits 598,000 Fines and Forfeits 525,000 Intergovernmental Revenues 516,000 Charges for Services 467,500 Total $2,854,500 Required: Record the receipt of cash and the related credits to revenues accounts, as applicable, in both the General Fund and governmental activities journals. (Select Received in Cash in the drop down [Transaction 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. Fines and forfeits were collected by General Government departments in the amount of $200,000 and by Public Safety departments in the amount of $325,000. Intergovernmental Revenues should be 21 credited to Program RevenuesGeneral GovernmentOperating Grants and Contributions. 7.

[Para. 4-a-7] The General Fund paid the $14,300 reported as Due to Other Funds at the end of FY 2016. This amount was reported as Internal Payables to Business -type Activities at the government-wide level. (Note: 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. 8.

[Para. 4-a-8] Delinquent taxes receivable in the amount of $46,000 were written off as uncollectible. Interest and penalties accrued on these taxes in the amount of $1,000 were also written off. Required: Record the writeoffs in both the General Fund and governmental activities general journals. 9.

[Para. 4-a-9] General Fund payrolls for the year totaled $5,080,000. Of that amount, $772,000 was withheld for employees' federal income taxes; $861,000 for federal payroll taxes; $290,000 for employees state income taxes; $320,000 for retirement funds administered by the state government; and the remaining $2,797,000 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 $ 1,350,000 Public Safety 2,292,000 Public Works 1,090,000 Culture and Recreation 308,000 Total $5,040,000 Required: Make summary journal entries for payroll in both the General Fund and governmental activities general journals for the year. 10.

[Para. 4-a-10] Invoices for some of goods and services ordered in transaction 4- a-3 were received and vouchered for later payment. (Select Elimination in the drop down [Transaction Description] menu in the Detail Journal): Actual Estimated General Government $ 531,500 $ 532,000 Public Safety 1,636,500 1,638,600 Public Works 1,122,300 1,127,500 Culture and Recreation 654,900 650,600 Totals $3,945,200 $3,948,700 22 Required: Record the receipt of these goods and the related vouchers payable in both the General Fund and governmental activities journals. At the governmentwide level, you should assume the city uses the periodic inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except for $72,500 of playground equipment ordered by Culture and Recreation. The equipment meets the citys threshold for capitalization (debit Equipment for this item at the government-wide level). 11.

[Para. 4-a-11] The General Fund paid vouchers during the year in the amount of $3,200,000 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. 12.

[Para. 4-a-12] The General Fund transferred $50,000 to the debt service fund so the debt service fund could make 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.)

13. [Para. 4-a-13] 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. 14.

[Para. 4-a-14] The General Fund recorded liabilities of $50,000 to other funds for services received from the Water Utility Fund during the year. Of this amount, $39,000 should be charged to Public Safety and $11,000 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. 23 15.

[Para. 4-a-15] The balances in the current taxes receivable and related estimated uncollectibles accounts were reclassified as delinquent. The city believes that $480,000 of the delinquent taxes will be collected in the first 60 days of 2018. Interest and penalties of $56,500 were recorded on the delinquent taxes, of which $10,500 was estimated to be uncollectible. Required: Record this transaction and reclassification in the General Fund and governmental activities journals. 16.

[Para. 4 a-16] 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: Intergovernmental Revenue $ 8,000 decrease Fines and Forfeits 15,000 increase Appropriations: General Government $ 10,000 decrease Public Safety 18,000 increase 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 [Transaction Description] box 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.

17. [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 Balance Unassigned. 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. 24 To close the temporary accounts, you must click on the check mark for [Closing Entry], Closing Entry will appear in the [Transaction Description] box. Be sure the check mark in the box for [Closing Entry] is showing 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 2017 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 Balance Unassigned 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 BalanceAssignedCulture and Recreation $57,650 Fund BalanceAssignedPublic Works 12,300 Fund BalanceCommittedPublic Safety 33,790 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. b. 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, 2017. Use Excel or other spreadsheet software to prepare in good form a balance sheet for the General Fund as of December 31, 2017. Follow the format shown in Illustration 4-3 of Reck and Lowensohn, Accounting for Governmental and Nonprofit Entities, 17th edition textbook (hereafter referred to as the textbook.) Alternatively, you can click on [Reports] to print the post-closing trial balance and use the printed copy to manually prepare a balance sheet. c. Refer to the General Fund Revenues and Appropriations/Encumbrances/Expenditures Subsidiary Ledgers found under Reports and Ledgers. Use Excel or other spreadsheet software 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, 2017. (See Illustration 4-4 in the textbook for an example format.) d. Refer to the General Fund Revenues and Appropriations/Encumbrances/Expenditures Subsidiary Ledgers found in part c above to prepare in good form a statement of revenues, expenditures, and changes in fund balancesbudget and actual for the 25 General Fund for the year ended December 31, 2017. (See Illustration 4-5 in the textbook for an example format.) e. 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 following Illustration 4-5, which compares Illustrations 4-4 and 4-5.) [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 files electronically.] Before closing the City of Bingham, click on [File], and [Save/Save As] to save your work. If you close the file by clicking on the [X] box you will be asked if you want to save your changes before closing.