- General Fund Kaatskill places purchase orders for supplies, chargeable to the following appropriations: 6- General Fund The supplies ordered in all four purchase orders are received and inspected. The invoices for PO 1, 2 and 3 are for the same amounts as shown in the purchase orders: 40,000 for PO 1, 42,000for PO 2, and 60,000 for PO 3. However, the invoice for PO4 is for 21,000 because the order allowed the supplier to ship and bill for additional quantities up to 5 percent. All the invoices are approved for payment, and vouchers are prepared. The first journal entry reverses the budgetary entry made in transaction 6 for the encumbrances; the second (a financial journal entry) reconds the expenditures and the liability. Notice that the amounts shown in the budgetary entry to reverse the encumbrances are the same as the amounts shown to record the encumbrances, but the amounts shown in the financial entry are greater by 1,000 . 7-General Fund The vouchers prepared in the previous transaction are paid. 8- General Fund During the year, Kaatskill receives additional cash from the following sources: Kaatskill considers revenues from licenses and fees and from fines and forfeits to be immaterial and, therefore, accounts for them on the cash basis. 9. General Fund On October 3, Kaatskill repays the 300,000 borrowed on a tax anticipation note earlier in the year, together with interest of 3,000 (sce transaction 2). 10- General Fund During the year, Kaatskill pays salaries to its employees, chargeable to the following appropriations: 11- General Fund The last payment for salaries in 2,013 covered the pay period ended Friday, December 27. Payment for the period December 28 - 31 will not be made until 2014. As noted earlier in the chapter, GASB standards require that salary expenditures for the stub period must be accrued in governmental funds because "once incurred, [they] normally are paid in a timely manner and in full from current financial resources." Governments generally budget for stub period salaries each year because failure to accumulate resources for them will result, periodically, in the need for budgeting for an additional pay period, which may create budget problems. Illustration: Illustration: The Village of Kaatskill, which operates on a calendar year basis, is govemed by an elected board of trustees. Its day-to-day activities are administered by an appointed village manager. The village has a General Fund, which is financed primarily by taxes on real property, and a Training Special Revenue Fund, which is financed by an annual grant from the state. The village manager is responsible for preparing annual budgets for activities accounted for in both funds; the budgets become law after review and approval by the board of trustees. The General Fund balance sheet at January 1,2013, showed cash of 50,000 no liabilities, and a fund balance (Unassigned) of 50000 . The approved budget for calendar year 2013 is as follows: 2. General Fund Kaatskill levies the real property taxes provided for in the budget. Property taxes are payable in two equal installments, during March and September of 2013. Based on past experience, Kaatskill assumes all taxes, 2,500,000 will be paid either during 2013 or soon enough thereafter to pay expenditures attributable to 2013. Therefore, it makes no provision for uncollectible taxes. The following financial joumal entry records the tax levy. 3. General Fund Because of the timing of the two property tax installments, Kaatskill's cash flow projections indicate that it neods to borrow 300,000. On January 3, Kaatskill sells tax anticipation notes in the amount of 300,000 to a local bank, payable with interest of 3,000 on October 3. Because the liability is short term, the borrowing is reconded as a liability of the General Fund. 4-General Fund Katubll receives cash of 980,000 from real property tax collections during the year. - General Fund Kaatskill places purchase orders for supplies, chargeable to the following appropriations: 6- General Fund The supplies ordered in all four purchase orders are received and inspected. The invoices for PO 1, 2 and 3 are for the same amounts as shown in the purchase orders: 40,000 for PO 1, 42,000for PO 2, and 60,000 for PO 3. However, the invoice for PO4 is for 21,000 because the order allowed the supplier to ship and bill for additional quantities up to 5 percent. All the invoices are approved for payment, and vouchers are prepared. The first journal entry reverses the budgetary entry made in transaction 6 for the encumbrances; the second (a financial journal entry) reconds the expenditures and the liability. Notice that the amounts shown in the budgetary entry to reverse the encumbrances are the same as the amounts shown to record the encumbrances, but the amounts shown in the financial entry are greater by 1,000 . 7-General Fund The vouchers prepared in the previous transaction are paid. 8- General Fund During the year, Kaatskill receives additional cash from the following sources: Kaatskill considers revenues from licenses and fees and from fines and forfeits to be immaterial and, therefore, accounts for them on the cash basis. 9. General Fund On October 3, Kaatskill repays the 300,000 borrowed on a tax anticipation note earlier in the year, together with interest of 3,000 (sce transaction 2). 10- General Fund During the year, Kaatskill pays salaries to its employees, chargeable to the following appropriations: 11- General Fund The last payment for salaries in 2,013 covered the pay period ended Friday, December 27. Payment for the period December 28 - 31 will not be made until 2014. As noted earlier in the chapter, GASB standards require that salary expenditures for the stub period must be accrued in governmental funds because "once incurred, [they] normally are paid in a timely manner and in full from current financial resources." Governments generally budget for stub period salaries each year because failure to accumulate resources for them will result, periodically, in the need for budgeting for an additional pay period, which may create budget problems. Illustration: Illustration: The Village of Kaatskill, which operates on a calendar year basis, is govemed by an elected board of trustees. Its day-to-day activities are administered by an appointed village manager. The village has a General Fund, which is financed primarily by taxes on real property, and a Training Special Revenue Fund, which is financed by an annual grant from the state. The village manager is responsible for preparing annual budgets for activities accounted for in both funds; the budgets become law after review and approval by the board of trustees. The General Fund balance sheet at January 1,2013, showed cash of 50,000 no liabilities, and a fund balance (Unassigned) of 50000 . The approved budget for calendar year 2013 is as follows: 2. General Fund Kaatskill levies the real property taxes provided for in the budget. Property taxes are payable in two equal installments, during March and September of 2013. Based on past experience, Kaatskill assumes all taxes, 2,500,000 will be paid either during 2013 or soon enough thereafter to pay expenditures attributable to 2013. Therefore, it makes no provision for uncollectible taxes. The following financial joumal entry records the tax levy. 3. General Fund Because of the timing of the two property tax installments, Kaatskill's cash flow projections indicate that it neods to borrow 300,000. On January 3, Kaatskill sells tax anticipation notes in the amount of 300,000 to a local bank, payable with interest of 3,000 on October 3. Because the liability is short term, the borrowing is reconded as a liability of the General Fund. 4-General Fund Katubll receives cash of 980,000 from real property tax collections during the year