Introduction

$In$ the practice set you will have the opportunity $to$ maintain a set $of$ accounting records for a typical local town government encompassing the first two months $of$ its fiscal year. $At$ the end $of$ the second month $we$ will make the adjusting and closing entries $asifit$ were the end $of$ the fiscal year. $We$ will also prepare the appropriate financial statements.

The town maintains its accounting records $on$ the modified accrual basis $of$ accounting. This means that all material items $of$ revenues earned $or$ expenditures incurred are'accrued $in$ order $to$ prepare the financial statements. The accounting system used $by$ the town $is$ prescribed $by$ the State Comptroller and consists $of$ the following records:$\frac{?}{}>\frac{?}{?}>\frac{?}{?}$

General Journal

$>$ Cash Disbursements Journal$\frac{?}{}>\frac{?}{?}$

Cash Receipts Journal$\frac{?}{}>\frac{?}{?}$

General Ledger

$>$ Subsidiary Expenditure Ledger$\frac{?}{}>\frac{?}{?}$

Subsidiary Revenue Ledger.

Also included $in$ the practice set $is$ a chart $of$ accounts and a schedule $of$ exhibits $to$ assist $in$ recording the appropriate transactions. Balances from the previous year have been brought forward $in$ the General Ledger.

CHART $OF$ ACCOUNTS

General Fund$-$General Ledger Account Codes

Assets

$A200$ Cash

$A201$ Cash $in$ Time Deposits

$A250$ Taxes Receivable, Current

$A410$ State and Federal, Other

$A440$ Due from Other Governments

Budgetary and Expenditure Accounts

$A510$ Estimated Revenues

$A521$ Encumbrances

$A522$ Expenditures

$A599$ Appropriated Fund Balance

Liabilities

$A600$ Accounts Payable

$A601$ Accrued Liabilities

Fund Balance, Reserved

$A821$ Reserve for Encumbrances

Fund Balance, Unreserved

$A909$ Fund Balance, Unreserved

Budgetary and Revenue Accounts

$A960$ Appropriations

$A980$ Revenues

General Fund $-$ Individual Revenue and Expenditure Account Codes

Revenue Account Codes

$A1001$ Real Property Taxes

$A1090$ Interest $on$ Taxes

$A1120$ Non$-$Property Tax Distribution $by$ County $(Sales$ Tax$)$

$A1255$ Clerk Fees

$A3820$ Youth Programs

Expenditure Account Codes

$A1990\mathrm{.}4$ Contingent Account

$A3120\mathrm{.}1$ Police$-$Personal Services

$A3120\mathrm{.}2$ Police $-$ Equipment and Other Capital Outlay

$A3120\mathrm{.}4$ Police $-$ Contractual Expenditure

$A7110\mathrm{.}1$ Parks $-$ Personal Services

$A7110\mathrm{.}2$ Parks $-$ Equipment and Other Capital Outlay

$A7110\mathrm{.}4$ Parks $-$ Contractual Expenditure

Practice Set $-$ Assumptions and Exhibits

The following assumptions and exhibits will $be$ used $in$ preparing the practice set.

The Town's opening balances are:

$(General$ Ledgers are already posted$)$

ExhibitA

The following budget was approved for $20XX$ year:

$A510$ Estimated Revenues $$100,000$

$A1001$ Real Property Taxes $$50,000,$

$A1120$ Sales Tax $40,000,$

$A3820$ State Aid $10,000,$

$A599$ Appropriated Fund Balance $$,30,000$

$,$ Appropriation Subsidiaries

Exhibit.$B$

The following payrolls were prepared and recorded during the first two months. The town

pays all employees $onabi-$weekly basis.

Payroll #$4A.$ Accounting Entries

January $2-$ The budget included $in$ Exhibit $Ais$ journalized and posted $to$ the

appropriate ledgers.

January $2-$ Real Property Tax bills are prepared and mailed amounting $to$ $$50,000.$

January $5-$ Sales Tax Revenues $($$$10,000)$ for the $4^{th}$ quarter $of$ last year $is$ received.

January $10-$ A State aid youth claim $is$ prepared and submitted for $$1,000.$ Moneys

are anticipated $tobe$ received during the town's fiscal year.

January $15-$ Payroll #$1in$ Exhibit $Bis$ paid.

January $20-$ Received prior year State aid claim accrued minus $$500$ disallowance.

January $29-$ Payroll #$2in$ Exhibit $Bis$ paid.

January $30-$ Abstract #$1in$ Exhibit $Cis$ paid.

January $31-$ Tax Collector remits tax moneys $in$ the amount $of$ $$40,000.$

February $1-$ The Police Department issues purchase order #$1$ for equipment $(3120\mathrm{.}2)$

$in$ the amount $of$ $$13,000.$

February $2-$ Receives State aid for youth program $in$ the amount $of$ $$1,100($$$100$

adjustment for mathematical mistake$).$

February $10-$ Tax Collector submits balance $of$ taxes $($$$10,000)in$ addition $to$ $$200in$

interest.

February $16-$ Payroll #$3in$ Exhibit $Bis$ paid.

February $17-$ The Police Department issues purchase order #$2$ for equipment $in$ the

amount $of$ $$9,000.(Hint$: $If$ there $is$ insufficient appropriations, transfer

from $3120\mathrm{.}4.)$

February $22-$ Paid Abstract #$2$ Exhibit $C.$Practice Set

February $28-$ Record Payroll #$4$ Exhibit $B.$ Payroll should charge $80$ percent $to$ month

$of$ February, $20$ percent should $be$ attributed $to$ March.

$B.$ Adjusting Entries

Park equipment $in$ the amount $of$ $$4,000.(7110\mathrm{.}2)$ was received but never recorded.

A State aid claim has just been submitted $$5,000(youth$ program$).$

$C.$ Prepare Closing Entries

$D.$ Prepare Year$-$End Financial Statements $(Formof$ Statements $in$ Packet$)$