GENERAL FUND ACCOUNTING CYCLE PROJECT

Complete the following steps:

1.Post the transactions to your T-Accounts.

2.Prepare a trial balance in an Excel worksheet.

3.Prepare a balance sheet for the General Fund in an Excel worksheet.

4.Prepare a statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund in an Excel worksheet.

NARRATIVE:

The General Fund is used to account for all activities that are not reflected in another fund. Principal revenues of this fund consist of real estate taxes, fines, penalties, license fees, etc. Expenditures generally consist of those costs necessary to provide general services, such as fire and police protection. Revenues and Expenditures are recorded in controlling accounts, with detailed accounts (such as wages, supplies, etc.) being recorded as subsidiary records. This detail is necessary to prepare the Statement of Revenues, Expenditures, and Changes in Fund Balance.

A budgetary system is used, and is reflected in the journal entries. All expenditures are encumbered, with only a few exceptions (such as salaries). Purchase orders outstanding at the end of the fiscal year will be honored, and will be paid in the following year. As such, a portion of the Fund Balance must be reserved to allow for the future expenditures.

The City of Watertown is beginning its first year of operations. The citys first fiscal budget has been approved, and the following data pertaining to the General Fund are available:

1.Estimated revenues for the year are $600,000. Appropriations are $590,000.

2. Property taxes of $400,000 are levied. It is estimated that 3 percent ($12,000)

will not be collected.

3.Other revenues of $10,000 meet the criteria for accrual. Estimated uncollectible

revenues amount to $400.

4.An order was placed for supplies for the police department in the amount of $3,000. When the supplies were received, the invoice amounted to $3,050 which included freight charges.

5.Payroll costs of $40,000 were vouchered.

6.Cash collections amounted to $350,000 for property taxes levied and $5,000 of previously accrued revenues for a total of $355,000.

7.Uncollected property taxes are now delinquent.

8.Self-assessed taxes, license fees, and fines were collected, amounting to

$205,000.

9.The bill for the supplies order in (4) above, was paid.

10.Miscellaneous supplies were ordered from various vendors. The total amount of the orders amounts to $30,000.

11.Invoices were received for the items ordered in 10 above, amounting to $20,000.

There were no differences between the respective purchase orders and the

invoices.

12.Taxes were collected in advance in the amount of $800.

13.Delinquent taxes of $8,000 are uncollectible and are to be written off.

14.Delinquent taxes of $12,000 and $800 of interest and penalties were collected.

The interest has not yet been accrued.

15.Interest and penalties on delinquent taxes amount to $4,000. This is in addition to

the amount in 14 above. Uncollectible interest is estimated at $300.

16.Other expenditures during the year amount to $420,000. For purposes of this

discussion, these expenditures are paid without vouchering them.

17.The Internal Service Fund furnished the fire department with $2,000 of operating

supplies.

18.Interest and principal paid to the Debt Service Fund amounted to $99,000.

19.The entry to close the budget is made.

20.All other closing entries are made.

21.The non-lapsing encumbrances are reversed.

22.An appropriate amount of Fund Balance is reserved for the non-lapsing

encumbrances.

23.Inventory of supplies at year end is $3,200, which is considered material.

Accordingly, an asset is established, and a portion of Fund Balance is set aside as unspendable.