Chapter 4

The Balance Sheet of the Street and Highway Fund of the City of Monroe as of December 31, 2016, follows. These (beginning) balances have been entered in the proper general ledger accounts, as of 1/1/2017.

CITY OF MONROE
Street and Highway Fund Balance Sheet
As of December 31, 2016
Assets
Cash		$23,000
Investments		59,000
Due from state government		107,000
Total assets		$189,000
Liabilities and Fund Equity
Liabilities:
Accounts payable		$9,000
Fund equity:
Fund balanceassigned for streets and highways		180,000
Total liabilities and fund equity		$189,000

3C. This portion of the continuous problem requires the recording and posting of the budgetary entries. To reduce clerical effort required for the solution use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. Record these journal entries in the respective Chapter 4 Excel templates. Subsidiary accounts are not required. Budget information for the City includes:

1. As of January 1, 2017, the City Council approved and the mayor signed a budget for the Street and Highway Fund that provided for estimated revenues from the state government in the amount of $1,068,000 and appropriations of $1,047,000. Record the budget and post to the ledger.

4C. Special Revenue Fund Transactions

Required:

a. Record journal entries for the following transactions for FY 2017 and post to the general ledger. As there are relatively few revenues and expenditures, the use of control accounts is not necessary. (Make entries directly to individual revenue and expenditure accounts).

(1) The state government notified the City that $1,065,000 will be available for street and highway maintenance during 2017 (i.e. the City has met eligibility requirements). The funds are not considered reimbursement-type as defined by GASB standards.

(2) Cash in the total amount of $997,000 was received from the state government.

(3) Contracts, all eligible for payment from the Street and Highway Fund, were signed in the amount of $1,062,000.

(4) Contractual services (see transaction 3) were received; the related contracts amounted to $1,042,000. Invoices amounting to $1,040,500 for these items were approved for payment. The goods and services all were for street and highway maintenance.

(5) Investment revenue of $5,120 was earned and received.

(6) Accounts payable were paid in the amount of $923,000.

(7) All required legal steps were accomplished to increase appropriations in the amount of $4,500.

b. Prepare and post the necessary closing entries for the Street and Highway Fund.

c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the Street and Highway Fund for the fiscal year ended December 31, 2017.

d. Prepare a Balance Sheet for the Street and Highway Fund as of December 31, 2017. Assume any unexpended net resources are classified as Restricted Fund Balance.