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.

1. 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.

   1. [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.

   2. [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.

   3. [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

   4. [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.

   5. [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.

   6. [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).

   7. [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.

   8. [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.

   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 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.)

   10. [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.)

   11. [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.

   12. [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.