Module 2: Chapter 3: P3-3

P3-3 (Budgetary Comparison Statement) This problem is based on the information about the Murphy County General Fund budgeted and actual transactions and events described in Problem 3-2.

P3-2 (Budgetary and Other EntriesGeneral and Subsidiary Ledgers) The Murphy County Commissioners adopted the following General Fund budget for the 20X8 fiscal year:

Murphy County

General Fund

Budget20X8

Estimated Revenues:

Taxes

$ 8,000,000

Licenses and permits

800,000

Intergovernmental

2,000,000

Charges for services

200,000

Fines and forfeits

400,000

Other

600,000

12,000,000

Appropriations:

General government

1,000,000

Public safety

4,000,000

Highways and streets

5,000,000

Health and sanitation

900,000

Culture and recreation

400,000

Other

600,000

11,900,000

Excess of Estimated Revenues over Appropriations

100,000

Fund BalanceBeginning

1,400,000

Fund BalanceEnding (Anticipated)

$1,500,000

The following events occurred during 20X8:

Purchase orders issued and contracts let were expected to cost:

General government

$ 300,000

Public safety

1,200,000

Highways and streets

2,500,000

Health and sanitation

500,000

Culture and recreation

300,000

Other

200,000

$ 5,000,000

The commissioners reviewed the budget during the year and (a) revised the estimate of Intergovernmental Revenues to $1,500,000 and reduced the Public safety and Highways and streets appropriations by $225,000 each to partially compensate for the anticipated decline in intergovernmental revenues, and (b) increased the Health and sanitation appropriation by $70,000 because of costs incurred in connection with an unusual outbreak of Tasmanian flu.

Revenues (actual) for 20X8 were:

Taxes

$ 8,150,000

Licenses and permits

785,000

Intergovernmental

1,520,000

Charges for services

210,000

Fines and forfeits

395,000

Other

500,000

$11,560,000

Goods and services under purchase orders and contracts were received:

Estimated Cost

Actual Cost

General government

$ 280,000

$ 278,000

Public safety

900,000

910,000

Highways and streets

2,500,000

2,500,000

Health and sanitation

440,000

440,000

Culture and recreation

300,000

295,000

Other

180,000

181,000

$4,600,000

$4,604,000

The remaining orders are still outstanding.

Other expenditures incurred were:

General government

$ 700,000

Public safety

2,560,000

Highways and streets

2,271,000

Health and sanitation

485,000

Culture and recreation

45,000

Other

391,000

$6,452,000

Required

Set up general ledger T-accounts like those in Illustration 3-1 and also revenues and expenditures subsidiary ledgers like those in Illustrations 3-2 and 3-3.

Record the Murphy County 20X8 General Fund budget in the general ledger and subsidiary ledger accounts, keying these entries B (for budget). Then record the numbered transactions and events, keying these entries by those numbers.

Required

Prepare a budgetary comparison statement for the General Fund of Murphy County for the 20X8 fiscal year. The statement should present revenues (by source category), expenditures and encumbrances (by function), and the excess of revenues over (under) expenditures and encumbrances. Use these column headings:

Original Budget

Revised Budget

Actual

VarianceOver (Under)

Assume that no encumbrances were outstanding at the beginning of 20X8.

Because encumbrances do not constitute expenditures, some governmental fund budgetary comparison statements omit data on encumbrances. (a) If no encumbrances were outstanding at the beginning of 20X8, what effects would omission of encumbrances data have on the Murphy County General Fund budgetary comparison statement for the 20X8 fiscal year? (b) In what circumstances would including or excluding encumbrances data mislead users of a governmental fund budgetary comparison statement?