Question
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
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 Smithville that occurred during fiscal year 2020, the year for which the budget given in Chapter 3 was recorded. Read all instructions carefully.
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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 2020. 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. Regardless of the method you choose, we recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck, Lowensohn, and Neely textbook (18 th edition) for guidance in making all entries.
For each entry affecting budgetary accounts or operating statement accounts, you will be directed to the Detail Journal to allow you to record the appropriate amounts in the detail budgetary or actual accounts, as was the case in Chapter 3.
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[Para. 4-a-1] On January 2, 2020, real property taxes were levied for the year in the amount of $1,878,700. It was estimated that 2 percent of the levy would 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 [Add description] field 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.) For the General Fund you will be directed to the Detail Journal. Select "Accrued Revenue" in the drop down [Description] menu in the Detail Journal related to the General Fund entry.
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[Para. 4-a-2] Encumbrances were recorded in the following amounts for purchase orders issued against the appropriations indicated:
General Government $ 193,220 Public Safety 442,900 Public Works 208,300 Health and Welfare 154,295 Culture and Recreation 143,580 Total $1,142,295 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.
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[Para. 4-a-3] Cash was received during the year in the total amount of $5,710,511 for collections from the following receivables and cash revenues, as indicated:
Current Property Taxes $1,488,206 Delinquent Property Taxes 387,201 Interest and Penalties Receivable on Taxes 34,270 Due from Other Funds/Internal Receivables 12,000 Due from State Government 165,000 Revenues: (total: $3,623,834) Sales Taxes 1,579,203 Licenses and Permits 477,960 Fines and Forfeits 211,106 Intergovernmental 639,000 Charges for Services 625,315 Miscellaneous 91,250 Total $5,710,511 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.)
For purposes of the governmental activities entries at the government-wide level assume the following revenue classifications:
General Fund Governmental Activities Sales Taxes General RevenuesTaxesSales Licenses and Permits Program RevenuesGeneral GovernmentCharges for Services Fines and Forfeits Program RevenuesGeneral GovernmentCharges for Services Intergovernmental Program RevenuesPublic SafetyOperating Grants and Contributions, $295,000 Program RevenuesHealth and Welfare Operating Grants and Contributions, $344,000 Charges for Services Program RevenuesGeneral Government Charges for Services, $250,126 Program RevenuesPublic Safety Charges for Services, $93,798 Program RevenuesCulture and Recreation Charges for Services, $281,391 Miscellaneous General RevenuesMiscellaneous, $91,250 -
[Para. 4-a-4] Of the $387,201 in delinquent property taxes collected in transaction 4-a-3, $85,549 had been recorded in the Deferred Inflows of Resources account. Additionally, $7,540 of the interest and penalties collected in 4-a-3 had also been recorded as deferred inflows of resources.
Required: In the General Fund recognize the property tax revenues and the interest and penalties revenues related to the deferred inflows of resources. To do this debit the Deferred Inflows of Resources account and credit related property tax revenues and interest and penalties revenues. Select "Previous Deferral" in the [Description] menu in the Detail Journal. Under accrual accounting the deferral was not recognized in the governmental activities journal; therefore, there is no need to record a journal entry in the governmental activities journal.
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[Para. 4-a-5] General Fund payrolls for the year totaled $4,401,482. Of that amount, $660,222 was withheld for employees' federal income taxes; $472,193 for federal payroll taxes; $190,798 for employees state income taxes; $220,152 for retirement funds administered by the state government; and the remaining $2,858,117 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 $ 956,254 Public Safety 1,771,480 Public Works 624,960 Health and Welfare 545,370 Culture and Recreation 503.418 Total $4,401,482 Required: Make summary journal entries for payroll in both the General Fund and governmental activities general journals for the year.
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[Para. 4-a-6] 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 (select "Elimination" in the drop down [Description] menu in the Detail Journal):
Expenditures Encumbrances General Government $ 191,709 $ 191,720 Public Safety 442,870 442,900 Public Works 208,320 208,300 Health and Welfare 153,822 153,800 Culture and Recreation 141,990 142,000 Total $1,138,711 $1,138,720 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 periodic inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except that $38,340 of the amount charged to the Public Works function was for a vehicle and $43,570 of the amount charged to the Culture and Recreation function was for recreation equipment (debit Equipment for these items at the government-wide level).
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[Para. 4-a-7] During FY 2020, the City of Smithville received notification that the state government would send $150,000 to it at the beginning of the next fiscal year. Based on the citys definition of "available for use," the city considers the funds available to use for Public Safetys operating activities 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. (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 Public Safety function.
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[Para. 4-a-8] Checks were written in the total amount of $2,734,295 during 2020. These checks were in payment of the following items:
Vouchers Payable $1,199,264 Due to Other Funds/Internal Payables 6,400 Due to Federal Government 1,126,941 Due to State Government 401,690 Total amount paid $2,734,295 Required: Record the payment of these items in both the General Fund and governmental activities general journals.
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[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 the 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.)
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[Para. 4-a-10] The citys budget for 2020 was legally amended as follows:
Estimated Revenues: Decreases Increases Licenses and Permits $ 20,000 Appropriations: Public Safety $ 10,000 Culture and Recreation $ 13,000 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 [Description] field in the Detail Journal.)
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[Para. 4-a-11] Interest and penalties receivable on delinquent taxes was increased by $40,500; $3,248 of this was estimated as uncollectible and based on past history $8,910 was considered to be unavailable for use in the current fiscal year.
Required: Record this transaction in the General Fund and governmental activities journals. 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.
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[Para. 4-a-12] Services received by the General Government function of the General Fund from the Solid Waste Disposal Fund amounted to $18,200 during the year. Of this amount, $15,400 was paid in cash and $2,800 remained unpaid at year-end.
Required: 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.
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