Question
Continuous Problem City of Monroe Example Journal Entries have been referenced next to each transaction. Chapter 4 The Balance Sheets of the General Fund and
Continuous Problem City of Monroe
Example Journal Entries have been referenced next to each transaction.
Chapter 4
The Balance Sheets of the General Fund and the Street and Highway Fund of the City of Monroe as of December 31, 2014, follow. These (beginning) balances have been entered in the proper general ledger accounts, as of 1/1/2015.
CITY OF MONROE | ||
General Fund Balance Sheet | ||
As of December 31, 2014 | ||
Assets | ||
Cash |
| $502,000 |
Taxes receivable | $210,000 |
|
Less: Estimated uncollectible taxes | (42,000) |
|
net |
| 168,000 |
Interest and penalties receivable on taxes | 5,200 |
|
Less: Estimated uncollectible interest and penalties | (950) |
|
net |
| 4,250 |
Due from state government |
| 210,000 |
Total assets |
| $884,250 |
Liabilities, Deferred Inflows, and Fund Equity | ||
Liabilities: |
|
|
Accounts payable |
| $ 99,000 |
Due to other funds |
| 27,000 |
Total liabilities |
| 126,000 |
Deferred inflows Property taxes |
| 21,000 |
Fund equity: |
|
|
Fund balanceassigned (for outstanding encumbrances) | $17,000 |
|
Fund balanceunassigned | 720,250 |
|
Total fund balance |
| 737,250 |
Total liabilities, deferred inflows and fund equity |
| $884,250 |
|
|
|
|
|
|
CITY OF MONROE | ||
Street and Highway Fund Balance Sheet | ||
As of December 31, 2014 | ||
Assets | ||
Cash |
| $21,000 |
Investments |
| 59,000 |
Due from state government |
| 109,000 |
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 |
Before working this problem, work with the JE on pages 92 - 101. Also, work end of chapter exercises 4-3, 4-4, 4-5, 4-7, 4-8, 4-9.
4C. Part 1. General Fund Transactions
Required:
a. Record journal entries for the following transactions for FY 2015. Make any computations to the nearest dollar. Journal entry explanations are not required. Use control accounts for revenues, expenditures and budgetary accounts. It is not necessary to reflect subsidiary ledger entries.
(1) Encumbrances of $ 17,000 for purchase orders outstanding at the end of 2014 were re-established. (see JE 2, p 92)
(2) The January 1, 2015, balance in Deferred Inflows Property Taxes relates to the amount of the 2014 levy that was expected to be collected more than 60 days after December 31. This amount should be recognized as 2015 revenues. (see JE 3, p 92)
NOTE: On the first day of the new fiscal year, three entries need to be made: (1) record the budget (entry 1, page 91); (2) re-establish the encumbrances (entry 2, page 92); (3) record prior year property taxes as revenue (entry 3, p 93)
(3) A general tax levy in the amount of $6,800,000 was made. It is estimated that 2 percent of the tax will be uncollectible. (see JE 7, page 93)
(4) Tax anticipation notes in the amount of $500,000 were issued. (see JE 4 page 92)
(5) Goods and supplies related to all encumbrances outstanding as of December 31, 2014 were received, along with invoices amounting to $16,600; the invoices were approved for payment. The City maintains immaterial amounts in supply inventories and it is the practice of the City to charge supplies to expenditure when received. (see JE 13a, 13b page 95)
(6) All accounts payable and the amount due other funds were paid. (see JE 16, page 96)
(7) The General Fund collected the following ($ 10,811,500) in cash:
prior year taxes, $158,000;
interest and penalties receivable on prior year taxes, $3,500;
current taxes, $6,400,000;
$210,000 previously recorded as due from the state government;
licenses and permits, $800,000;
sales taxes, $2,890,000; and
miscellaneous revenues, $350,000.
(see JE 8a, 8b, 9, 10, 11 (pages 94-95)
(8) Purchase orders and contracts were issued in the amount of $3,465,000 (see JE 6, p 93)
(9) Payrolls for the General Fund totaled $5,070,000. Of that amount, $498,000 were withheld for employees federal income taxes and $357,000 were withheld for employees FICA and Medicare tax liability; the balance was paid in cash. The encumbrance system is not used for payrolls. (see JE 14a. 14b. page 96)
(10) The liability for the citys share of FICA and Medicare taxes, $357,000, was recorded as was the liability for state unemployment taxes in the amount of $28,000. (see JE 15, page 96)
(11) Invoices for most of the supplies and services ordered in transaction 8 were received in the amount of $3,375,300 and approved for payment. The related encumbrance amounted to $3,407,000. (see JE 13a, 13b page 95)
(12) Tax anticipation notes were paid at maturity, along with interest in the amount of $18,000. (See JE 12, page 95)
(13) Notification was received that an unrestricted state grant in the amount of $332,000 would be received during the first month of the next year.
Dr Due from State Government and Cr Revenues Control
(14) The General Fund recorded a liability to the Water and Sewer Fund for services in the amount of $37,000 and to the Stores and Services Fund for supplies in the amount of $313,200; $310,000 of the amount due the Stores and Services Fund was paid. (see journal entries on pages 98 99)
(15) The General Fund recorded an amount due of $52,000 from the state government, representing sales taxes to be collected from retail sales taking place during the last week of the year. (see JE 16, page 96)
(16) The General Fund paid accounts payable in the amount of $3,015,000 and paid the amounts due the federal and state governments. The General Fund also transferred to the debt service funds cash in the amount of $1,662,000 for the recurring payment of principal and interest. (see journal entries on pages 98 99)
(17) All required legal steps were accomplished to increase appropriations by the net amount of $212,000. Estimated revenues were increased by $73,000.( see JE 18, page 97)
(18) The City Council authorized a write-off of $51,000 in delinquent property taxes and corresponding interest and penalties amounting to $1,600. (see JE 24, page 100)
(19) Interest and penalties receivable on taxes were accrued in the amount of $17,200; $1,100 of this amount is expected to be uncollectible. (see JE 26, page 100)
(20) It is estimated that $27,500 of the outstanding taxes receivable will be collected more than 60 days beyond the fiscal year-end. (see JE 27, page 101)
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