Accounting for Governmental & Nonprofit Entities 18e (Reck)

City of Smithville 2019-2020 (Short Version)

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

6. [Para. 4-a-6] Invoices for someof the goods recorded as encumbrances in transaction 4-a-2 were received and vouchered for payment, as listed below. Related encumbrances were canceled in the amounts listed below (Select Elimination in the drop down [Description]menu in the Detail Journal):

Expenditures Encumbrances

General Government $130,606 $ 130,572

Public Safety 366,088 366,154

Public Works 141,981 141,972

Culture and Recreation 126,000 125,965

Total $764,675 $764,663

Required: Record the receipt of these goods and the related vouchers payable in both the General Fund and governmental activities journals. In the Detail Journal select Good received for the expenditures description. At the government-wide 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 that $32,340 of the amount charged to the Public Works function was for a vehicle (debit Equipment for this item at the government-wide level).

7. [Para. 4-a-7]During FY 2020, the City of Smithville received notification that the state government would send $150,000 at the beginning of the next fiscal year. Based on the citys definition of available for use, the city considers the funds available for General Governments use in the current reporting period. The budget for the current year included this amount as "Intergovernmental Revenue.

Required: Record this transaction as a receivable and revenue in the General Fund and governmental activities journals. (Note: Select Accrued Revenue in the [Description]menu in the Detail Journal). At the government-wide level, assume that this item is an operating grant to the Culture and Recreation function.

8. [Para. 4-a-8]Checks were written in the total amount of $2,096,571 during 2020. These checks were in payment of the following items:

Vouchers Payable $ 700,000

Due to Federal Government 1,131,506

Due to State Government 265,065

Total amount paid $2,096,571

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

9. [Para. 4-a-9]Current taxes receivable uncollected at year-end, and the related Allowance for Uncollectible Current Taxes account, were both reclassified as delinquent. Of the amount classified as delinquent it was determined $87,010 would not be collected within 60 days of the fiscal year end and would therefore be unavailable for use in the current period. As a result, this amount was reclassified as deferred inflows of resources.

Required: Record the reclassification of the current taxes receivable and related allowance for uncollectible account in the General Fund and governmental activities journals.

Reclassify $87,010 of property tax revenue to the Deferred Inflows of Resources account in the General Fund journal only. (Note: To accomplish the reclassification of revenue, debit the revenue account and credit deferred inflows of resources. Select Deferral in the [Description]menu in the Detail Journal.)

10.[Para. 4-a-10]Interest and penalties receivable on delinquent taxes was increased by $40,500; $3,248 of this was estimated as uncollectible and $8,910 was considered unavailable for use in the current fiscal year.

Required: Record this transaction in the General Fund and governmental activities journals as a revenue transaction. The $8,910 classified as unavailable for use is recorded as deferred inflows of resources in the General Fund journal and as revenue in the governmental activities journal.

Post all journal entries to the 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 General Fund Estimated Revenues and Appropriations accounts to Budgetary Fund Balance, and Revenues and Expenditures to Fund BalanceUnassigned. Because the City of Smithville 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. If, however, 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.

To close the temporary accounts, you must click the box for [Closing Entry]that appears when you [Add new entry]. Closing Entry will appear in the [Add credit] field. Be sure the check mark in the box for [Closing Entry]is showing before closing each individual account. Also, 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 will need to print the pre-closing version of these ledgers for year 2020 from the [Reports]menu.

At year-end, an analysis by the citys finance department determined the following constraints on fund balances in the General Fund. Prepare the appropriate closing/reclassification 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. Be sure the check mark in the box for [Closing Entry]is showing before closing each individual account.)

Account Ending Balance

Fund BalanceRestrictedGeneral Government $36,000

Fund BalanceCommittedPublic Works 12,700

Fund BalanceAssignedCulture and Recreation 0

Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL ACTIVITIES AT THIS TIMEsince 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 worksheet of the General Fund post-closing trial balance as of December 31, 2020. Use Excel to prepare in good form a balance sheet for the General Fund as of December 31, 2020. Follow the format shown in Illustration 4-4 of Reck, Lowensohn, and Neely, Accounting for Governmental & Nonprofit Entities, 18th editiontextbook (hereafter referred to as the textbook.)

c. 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 2020. Use Excel to prepare in good form a statement of revenues, expenditures, and changes in fund balance for the General Fund for the year ended December 31, 2020. (See Illustration 4-5 in the textbook for an example format.)

d. Use the Excel worksheet of the General Fund pre-closing subsidiary ledger account balances created in part cabove to prepare in good form a schedule of revenues, expenditures, and changes in fund balancebudget and actual for the General Fund for the year ended December 31, 2020. (See Illustration 4-6 in the textbook for an example format.)

e. Prepare a reconciliation of total expenditures reported in your solution to part cof this problem with the total expenditures and encumbrances reported in your solution to part dof this problem. (In Chapter 4 below Illustration 4-5, see discussion and example which compares Illustrations 4-5 and 4-6.)

[Note: File the printouts of all your worksheets 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 Smithvilleit 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. Click on Export my Project if you are using Chromebook.