Begin by putting the following ending balances, which will be your beginning balance, into T accounts on the provided excel spreadsheet. If you do not record these beginning balances your accounts will not be accurate and the closing entries will be incorrect, so please do this first. CITY OF SMITHVILLE Governmental Activities Government-wide Level Post-Closing Trial Balance As of December 31, 2013 General Ledger Account Title Debits Credits Cash $ 281,410 Taxes ReceivableDelinquent 618,706 Estimated Uncollectible Delinquent Taxes $ 36,890 Interest and Penalties Receivable on Taxes 69,380 Estimated Uncollectible Interest and Penalties 18,226 Due from State Government 500,000 Inventory of Supplies 60,000 Land 4,180,000 Infrastructure 9,862,000 Accumulated DepreciationInfrastructure 2,595,600 Buildings 6,296,000 Accumulated DepreciationBuildings 1,583,000 Equipment 3,529,000 Accumulated DepreciationEquipment 1,342,000 Vouchers Payable 482,844 Tax Anticipation Notes Payable 375,000 Due to Federal Government 148,600 Due to State Government 27,300 Net PositionNet Investment in Capital Assets 18,346,400 Net PositionUnrestricted 440,636 Totals $25,396,496 $25,396,496 The following budget for the General Fund of the City of Smithville was legally adopted for the fiscal year ending December 31, 2014. Estimated Revenues: Taxes: Real Property $1,646,000 Sales 1,885,000 Interest and Penalties on Taxes 7,000 Licenses and Permits 588,000 Fines and Forfeits 420,000 Intergovernmental Revenue 325,000 Charges for Services 230,000 Miscellaneous Revenues 80,000 Total Estimated Revenues $5,181,000 Appropriations: General Government $ 618,600 Public Safety 2,453,300 Public Works 920,600 Health and Welfare 620,200 Culture and Recreation 482,400 Miscellaneous 50,000 Total Appropriations $5,145,100 Presented below are a number of transactions for the City of Smithville that occurred during the fiscal year for which the budget given was recorded, the calendar year 2014. Read all instructions carefully. All the information you need to complete this project is in chapters 3 and 4. Because accounting covers a lot of different information, it is important to know where to find answers to questions. Follow the journal entries in chapters 3 and 4 and you will do fine. 1. [Para. 4-a-1] On January 2, 2014, real property taxes were levied for the year in the amount of $1,697,000. It was estimated that 3 percent of the levy would be uncollectible. 2. [Para. 4-a-2] Encumbrances were recorded in the following amounts for purchase orders issued against the appropriations indicated: General Government $ 98,453 Public Safety 185,259 Public Works 247,675 Health and Welfare 173,469 Culture and Recreation 108,927 Miscellaneous 41,563 Total $855,346 3. [Para. 4-a-3] Cash was received during the year in the total amount of $5,821,280 for collections from the following receivables and cash revenues, as indicated: Current Property Taxes $1,546,800 Delinquent Property Taxes 360,000 Interest and Penalties Receivable on Taxes 34,270 Due from State Government 500,000 Revenues: (total: $3,380,210) Sales Taxes 1,886,860 Licenses and Permits 583,800 Fines and Forfeits 423,360 Intergovernmental 168,000 Charges for Services 225,070 Miscellaneous 93,120 Total $5,821,280 For purposes of the governmental activities entries at the government-wide level assume the following classifications: General Fund Governmental Activities Sales Taxes General RevenuesTaxesSales Licenses and Permits Program RevenuesGeneral Government Charges for Services Fines and Forfeits Program RevenuesGeneral Government Charges for Services Intergovernmental Program RevenuesPublic SafetyOperating Grants and Contributions Charges for Services Program RevenuesGeneral Government Charges for Services, $140,100 Program RevenuesCulture and Recreation Charges for Services, $84,970 Miscellaneous General RevenuesMiscellaneous 4. [Para. 4-a-4] Additional interest and penalties were accrued on delinquent property taxes in the amount of $2,836, of which 10 percent was estimated to be uncollectible. (Note: Round the estimated uncollectible to the nearest whole dollar.) 5. [Para. 4-a-5] General Fund payrolls for the year totaled $3,822,600. Of that amount, $472,040 was withheld for employees' federal income taxes; $291,740 for employees share of FICA taxes; $171,610 for employees state income taxes; and the remaining $2,887,210 was paid to employees in cash. The City of Smithville does not record encumbrances for payrolls. The payrolls were chargeable against the following functions appropriations: General Government $ 476,376 Public Safety 2,013,110 Public Works 612,881 Health and Welfare 397,673 Culture and Recreation 322,560 Total $3,822,600 6. [Para. 4-a-6] The citys share of FICA taxes, $291,740, and the city's contribution of $195,380 to retirement funds administered by the state government were recorded as liabilities. Record this transaction in both the General Fund and governmental activities general journals. Assume that the total $487,120 should be allocated in the same proportions as in paragraph 4-a-5 above; that is: General Government: ($476,376/$3,822,600) x $487,120 = $60,705 Public Safety: ($2,013,110/$3,822,600) x $487,120 = $256,534 Public Works: ($612,881/$3,822,600) x $487,120 = $78,101 Health and Welfare: ($397,673/$3,822,600) x $487,120 = $50,676 Culture and Recreation: ($322,560/$3,822,600) x $487,120 = $41,104 (Note: The allocated amount for Public Works was rounded up one dollar to compensate for rounding error.) 7. [Para. 4-a-7] Invoices for some of the goods recorded as encumbrances in transaction 4-a-2 were received and vouchered for later payment, as listed below. Related encumbrances were canceled in the amounts shown Expenditures Encumbrances General Government $ 93,838 $ 94,752 Public Safety 173,669 173,356 Public Works 190,596 190,512 Health and Welfare 176,400 173,124 Culture and Recreation 109,280 108,927 Miscellaneous 41,160 41,563 $784,943 $782,234 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 periodic inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except that $27,800 of the amount charged to the Public Works function was for a vehicle (debit Equipment for this item at the government-wide level). Expenditures charged to the miscellaneous appropriation should be recorded in this case as General Government expenses at the government-wide level. 8. [Para. 4-a-8] During FY 2014, the City of Smithville received notification that the state government would remit $165,000 to it early in the next fiscal year, although this amount is intended to finance certain public safety operations of the current year. This amount had been anticipated and was included in the budget for the current year as "Intergovernmental Revenue. Record this transaction as a receivable and revenue in the General Fund and governmental activities journals. At the government-wide level, assume that this item is an operating grant to the Public Safety function. 9. [Para. 4-a-9] Checks were written in the total amount of $2,809,090 during 2014. These checks were in payment of the following items: Vouchers Payable $ 995,600 Tax Anticipation Notes Payable 375,000 (see Chapter 2) Expenditures (Interest on tax 8,400 anticipation notes) Due to Federal Government 1,068,400 Due to State Government 361,690 Total amount paid $2,809,090 (Note: Interest expenditures on tax anticipation notes were budgeted in the Miscellaneous category. Record them as a General Government expense at the government-wide level.) 10. [Para. 4-a-10] Current taxes receivable uncollected at year-end, and the related Estimated Uncollectible Current Taxes account, were both reclassified as delinquent. 11. [Para. 4-a-11] The citys budget for 2014 was legally amended as follows: Estimated Revenues: Decreases Increases Licenses and permits $ 5,000 Intergovernmental $ 5,000 Charges for Services 5,000 Miscellaneous 10,000 Total $10,000 $15,000 Appropriations: General Government $22,000 Public Safety 3,500 Public Works 15,000 Health and Welfare 5,500 Culture and Recreation $8,000 $8,000 $46,000 Note: These amendments decrease the balance of the Budgetary Fund Balance account by $33,000. 12. [Para. 4-a-12] Interest and penalties receivable on delinquent taxes was increased by $11,000; $3,500 of this was estimated as uncollectible. 13. [Para. 4-a-13] Services received by the General Government function of the General Fund from the Solid Waste Disposal Fund amounted to $16,500 during the year. Of this amount, $10,100 was paid in cash and $6,400 remained unpaid at year-end. Record the receipt of these services, amounts paid during the year, and remaining 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 Solid Waste Disposal Fund until instructed to do so in Chapter 7 of this case. (we only do chapter 4 of this project so please ignore the chapter 7 reference) 14. [Para. 4-a-14] Delinquent taxes receivable in the amount of $17,150 were written off as uncollectible. Interest and penalties already recorded as receivable on these taxes, amounting to $8,820, were also written off. Additional interest on these taxes that had legally accrued was not recorded since it was deemed uncollectible in its entirety. 15. [Para. 4-a-15] It was discovered that goods in the amount of $12,000 had been recorded in error as an expenditure against the General Government appropriation of the General Fund. These goods should have been charged to the Solid Waste Disposal Fund, an enterprise fund and a business-type activity at the government-wide level. This item had also been charged as an expense of the General Government function at the government-wide level. An interfund invoice was prepared to reduce expenditures of the General Fund for the $12,000 and recognize an interfund receivable. Record this reimbursement transaction in the General Fund and governmental activities journals, debiting Due from Other Funds in the General Fund and Internal Receivables from Business-type Activities at the government-wide level. 16. [4-a-16] In December 2014, the General Fund made a short-term loan of $20,000 to the Street Improvement Bond Debt Service Fund to assist with payment of an interest payment due on January 1, 2015. 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. 17. [4-a-17] Adjusting Entry. A physical count of consumable supplies at year-end showed an ending balance of $66,000, an increase of $6,000 during the year. The city uses the purchases method of accounting for its inventory in the General Fund and the consumption method at the government-wide level. Since the city uses a periodic inventory system, both at the fund and governmental levels, it records all purchases of inventory as expenditures in the General Fund and as expenses at the government-wide level. These were included as part of the amounts recorded in paragraph 4-a-7. Adjustments to the expenses accounts should be made to the Public Works function, where most supplies are used. Prepare the adjusting journal entries in the General Fund journal to adjust the Inventory of Supplies and Fund BalanceNonspendableInventory of Supplies accounts to the correct balances and the governmental activities journal to adjust the ExpensesPublic Works and Inventory of Supplies accounts. Post all journal entries to the T accounts on the T account tab. After reviewing all entries for accuracy, including year and paragraph numbers, post all entries. 18. Closing Entry. prepare and post the necessary entries to close the 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, although entries are not required in this problem for the next year. Note: DO NOT PREPARE CLOSING ENTRIES FOR GOVERNMENTAL ACTIVITIES AT THIS TIME. b. Use Excel to prepare in good form a balance sheet for the General Fund as of December 31, 2014. Follow the format shown in Illustration 4-3 of Reck, Lowensohn, and Wilson, Accounting for Governmental and Nonprofit Entities, 16th edition textbook (hereafter referred to as the textbook). c. 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, 2014. (See Illustration 4-4 in the textbook for an example format.) ***Check Figures: Cash: 376,290 Vouchers Payable: 272,187 Fund Balance Unassigned 372,925 (hint: there will be 4 other fund balances that are assigned for different accounts) Total Assets: 980,932 Total Fund Balance: 540,425 Excess Revenues over expenditures: 93,789