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 FundBudget20X8
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:

1. 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

2. 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.
3. 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

4. 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

5. The remaining orders are still outstanding.
6. 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

1. 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.
2. 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

1. 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.

2. 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?