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Continuing Problem Addition anrioa parts of this problem are at the end of Chapters 5 (covering General and Special Revenue Funds) cinapter 6 (covering Capital Projects and Debt Service Funds). Chapter 9 (covering preparation MBC hapter 10 (covering the governmental activities part of the government-wide financial statements) Part A- Chapter 3-Scenario and General Fund budgetary journal entries l he scenario: Croton City maintains four governmental-type funds: a General Fund Fund, a Capital Projects Fund, and a Debt Service Fund. roton City started its calendar year 2019 with the following General Fund balances (all numbers are in thousands of dollars). Debits Credits $1,800 800 Property taxes receivable. Salaries payable Deferred property tax revenues Unassigned fund balance. Totals $700 300 1,600 $2,600 $2,600 Croton has adopted the following budgetary and accounting policies: Encumbrance accounting is used only for the acquisition of supplies and for the award of contracts for construction and construction-related activities. Open encumbrances lapse at the end of the year, but are considered in developing the next year's budget. Because final income tax returns are not required to be filed until April 15 of the year following the end of a calendar year, "available" for income taxes is defined as taxes expected to be collected within 120 days after the end of the calendar year. Croton allows its employees to accumulate unused vacation days and to receive cash for up to 30 days of un used vacation leave at retirement. Such payments are charged to the department's appropriation for salari es. 3-33 Chapter 3 Budgetary Considerations in Governmental Accounting l revenues received by the library from fines, donations, and fundraising events are credited 1o Revenues-miscellaneous. General Fund budgctary journal entries: Prepare journal entries to record the following budgetary transactions ap- plicable to the General Fund. Also, prepare an appropriations ledger for the Public safety supplies appropriation. Because you will need to prepare trial balances for each of the funds for Part D of this problem, it is suggested that you post the opening trial balance and the journal entries to gencral ledger T accounts.) 1. The Croton council adopted the following General Fund budget for 2019: Revenues property taxes. Revenues-personal income taxes.... Revenues-intergovernmental. Revenues-recreation fees. Appropriations: $9,000 5,000 . .1,000 600 Public safety salaries Public safety supplies. Public works salaries... Parks salaries.. Transfer to Library Fund Transfer to Debt Service Fund . . . . . . .. . .. . 7,000 500 5,000 .2,300 100 1,200 .. . .. . . 2. Croton's Public Safety Department placed two purchase orders against its supplies appropriation, one for $300 for firearns and one for $1.50 for uniforms. 3. The firearms were received, with an invoice for $330. The purchase order allowed shipment of 10 percent over the amount ordered, so the invoice was approved. 4. The invoice for firearms was paid. 5. The Croton Cats won the World Series. To provide more funds for crowd control at the parade, the council increased the Public safety salaries appropriation by $100. purchase orders that had been encumbered will be charged against 2020 appropriations eumor ances that Continuing Prol Part B (1) Chapter 5- Journal entries for General Fund financial transactions for Croton City Prepare journal entries, as appropriate, to record these transactions. (We suggest you post the journal entries to general ledger T-accounts.) Note: The Croton City continuing problem is introduced in Chapter 3 on page 3-32 You should review the scenario in Chapter 3 before preparing the journal entries for the General Fund in thi chapter. 1. Of the $800 in property taxes receivable at January 1, $780 was collected in cash. The remaining $20 was written off as uncollectible. Deferred property taxes at the beginning of the year were recognized as revenue ($300). 2. Accrued salaries from the previous year ($700) were paid. 3. Property taxes in the amount of $9,030 were levied in order to provide revenues of $9,000. Tax bills were sent to the property owners. An allowance for uncollectible taxes was established. 4. During the year, property taxes of $8,100 were collected in cash. 5. The state collects personal income taxes on behalf of the city. During the year, Croton received personal income taxes of $4,600 from the state. 6. The Parks Department collected $700 in recreation fees during the year. 7. Croton paid salaries of $13,600, charging the salary appropriations as follows: Public safety $6,700 Public works 4,700 Parks 2,200 Chapter 5 General and Special Revenue Funds (Continued) 5-53 program, stipulating that the used at any time during 2019 or 2020. The $6,700 in public safety salaries paid in the es $800 of salaries for this program, so $200 remains available for spending on 8. The state sent the city a check for $1,000 to finance a special public safety previous transaction includ the program in 2020 es at year-end (to be paid during the first week of 2020) were as follows Public safety $350 Public works 250 Parks 100 10. At year-end, the unco llected property taxes were declared delinquent. The existing allowance for uncollect ible taxes is reclassified to delinquent. Croton's director of finance estimated that $500 of the uncollected taxes would be collected in January and February 2020 and $400 would be collected during the rest 11. the state advised Croton that the state held $500 in personal income taxes on the city's t it would send the taxes to Croton by February 10. It also told Croton that it was likely that, taxes with final returns, but that tax refunds would e taxes is defined as taxes expected to be collected In January 2020, behalf and tha by April 30, Croton would receive an additional $200 of probably be $300. (Remember that "available" for incom within 120 days after the end of the calendar year.) 12. Police officers who retired at the end of 2019 will be paid $10 for unused vacation pay on January 6 , 2020 Part B (2)-Chapter 5-Journal entries for Special Revenue Fund transactions The Library Special Revenue Fund commenced calendar year 2019 with a cash balance of $5, no l restricted fund balance of $5. Prepare journal entries to record these transactions in the Library Special Revenue Fund and, where appropriate, in the General Fund.(We suggest you post opening balances and the journal entries to general ledger T-accounts.) 1. The General Fund transferred $100 cash to the Library Special Revenue Fund to help the library finance its iabilities, and a activities for the year The library rec there is no requirement as to when it must be spent. eived a grant of $300 from the county. The grant must be used only for library purposes, but 2. 3. The library received $20 from fines, donations, and various fundraising events 4. The library paid $350 for salaries and S40 to acquire books and periodicals. Charge the B ture salaries and Expenditures-culture supplies accounts, respectively no Continuing Problem art C (1)-Chapter 6 Journal entries for Capital Projects Fund tran t the st art of 2019, Croton's Capital Projects Fund had no assets or liabilities. Prepare appropriate journal en- MBC record thesc transactions in the Capital Projects Fund. (We suggest you post the journal entries to general ledger T-accounts.) 1. Croton undertook construction of a new police station, designed to house both the Croton police and the county sheriff and to serve as a detention center. To finance construction, Croton received a cash grant of 51,000 from the county as an advance pending incurrence of expenditures. It also sold $2,000 of 20-year general obligation bonds. The bonds, sold April 1, 2019, were to be redeemed in equal semiannual install- ments of principal, with interest on the unpaid balance at the rate of 5 percent per annum, starting October 1, 2019 2. Croton awarded two contracts, one for architectural and construction supervision services (5200) and ond 3. The construction contract was completed in a timcly manner, and the contractor submitted an invoice 4. All construction and constr for construction ($2,800) $2,800. The invoice was paid, except that 5 percent was withheld, pending completion of inspection. was paid in full, and the contractor was paid the balance duc uction supervision work was completed. The construction architect/supervisor Part C (2) hapter 6-Journal entries for Debt Service Fund transactions the start of 2019, Croton's Debt Service Fund had no assets or liabilities. Prepare appropriate to record these transactions in the Debt Service Fund and where appropriate, in the General Fund. (We suggest you post opening balances and the journal entries to general ledger T-accounts.) journal entries 1. The General Fund transferred $1,200 cash to the Debt Service Fund 2. The first installment of principal and interest on the bonds sold in Part C (1) came due for payment. 3. The principal and interest due for payment were paid 4. Debt service on bonds sold by Croton in previous years came due and was paid. Principal and interest pay- ments on those bonds were $600 and $470, respectively Chapter 6 Case Study-Having Faith in "Full Faith and Credit ith meneral gbligation debt, Continuing Problem Addition anrioa parts of this problem are at the end of Chapters 5 (covering General and Special Revenue Funds) cinapter 6 (covering Capital Projects and Debt Service Funds). Chapter 9 (covering preparation MBC hapter 10 (covering the governmental activities part of the government-wide financial statements) Part A- Chapter 3-Scenario and General Fund budgetary journal entries l he scenario: Croton City maintains four governmental-type funds: a General Fund Fund, a Capital Projects Fund, and a Debt Service Fund. roton City started its calendar year 2019 with the following General Fund balances (all numbers are in thousands of dollars). Debits Credits $1,800 800 Property taxes receivable. Salaries payable Deferred property tax revenues Unassigned fund balance. Totals $700 300 1,600 $2,600 $2,600 Croton has adopted the following budgetary and accounting policies: Encumbrance accounting is used only for the acquisition of supplies and for the award of contracts for construction and construction-related activities. Open encumbrances lapse at the end of the year, but are considered in developing the next year's budget. Because final income tax returns are not required to be filed until April 15 of the year following the end of a calendar year, "available" for income taxes is defined as taxes expected to be collected within 120 days after the end of the calendar year. Croton allows its employees to accumulate unused vacation days and to receive cash for up to 30 days of un used vacation leave at retirement. Such payments are charged to the department's appropriation for salari es. 3-33 Chapter 3 Budgetary Considerations in Governmental Accounting l revenues received by the library from fines, donations, and fundraising events are credited 1o Revenues-miscellaneous. General Fund budgctary journal entries: Prepare journal entries to record the following budgetary transactions ap- plicable to the General Fund. Also, prepare an appropriations ledger for the Public safety supplies appropriation. Because you will need to prepare trial balances for each of the funds for Part D of this problem, it is suggested that you post the opening trial balance and the journal entries to gencral ledger T accounts.) 1. The Croton council adopted the following General Fund budget for 2019: Revenues property taxes. Revenues-personal income taxes.... Revenues-intergovernmental. Revenues-recreation fees. Appropriations: $9,000 5,000 . .1,000 600 Public safety salaries Public safety supplies. Public works salaries... Parks salaries.. Transfer to Library Fund Transfer to Debt Service Fund . . . . . . .. . .. . 7,000 500 5,000 .2,300 100 1,200 .. . .. . . 2. Croton's Public Safety Department placed two purchase orders against its supplies appropriation, one for $300 for firearns and one for $1.50 for uniforms. 3. The firearms were received, with an invoice for $330. The purchase order allowed shipment of 10 percent over the amount ordered, so the invoice was approved. 4. The invoice for firearms was paid. 5. The Croton Cats won the World Series. To provide more funds for crowd control at the parade, the council increased the Public safety salaries appropriation by $100. purchase orders that had been encumbered will be charged against 2020 appropriations eumor ances that Continuing Prol Part B (1) Chapter 5- Journal entries for General Fund financial transactions for Croton City Prepare journal entries, as appropriate, to record these transactions. (We suggest you post the journal entries to general ledger T-accounts.) Note: The Croton City continuing problem is introduced in Chapter 3 on page 3-32 You should review the scenario in Chapter 3 before preparing the journal entries for the General Fund in thi chapter. 1. Of the $800 in property taxes receivable at January 1, $780 was collected in cash. The remaining $20 was written off as uncollectible. Deferred property taxes at the beginning of the year were recognized as revenue ($300). 2. Accrued salaries from the previous year ($700) were paid. 3. Property taxes in the amount of $9,030 were levied in order to provide revenues of $9,000. Tax bills were sent to the property owners. An allowance for uncollectible taxes was established. 4. During the year, property taxes of $8,100 were collected in cash. 5. The state collects personal income taxes on behalf of the city. During the year, Croton received personal income taxes of $4,600 from the state. 6. The Parks Department collected $700 in recreation fees during the year. 7. Croton paid salaries of $13,600, charging the salary appropriations as follows: Public safety $6,700 Public works 4,700 Parks 2,200 Chapter 5 General and Special Revenue Funds (Continued) 5-53 program, stipulating that the used at any time during 2019 or 2020. The $6,700 in public safety salaries paid in the es $800 of salaries for this program, so $200 remains available for spending on 8. The state sent the city a check for $1,000 to finance a special public safety previous transaction includ the program in 2020 es at year-end (to be paid during the first week of 2020) were as follows Public safety $350 Public works 250 Parks 100 10. At year-end, the unco llected property taxes were declared delinquent. The existing allowance for uncollect ible taxes is reclassified to delinquent. Croton's director of finance estimated that $500 of the uncollected taxes would be collected in January and February 2020 and $400 would be collected during the rest 11. the state advised Croton that the state held $500 in personal income taxes on the city's t it would send the taxes to Croton by February 10. It also told Croton that it was likely that, taxes with final returns, but that tax refunds would e taxes is defined as taxes expected to be collected In January 2020, behalf and tha by April 30, Croton would receive an additional $200 of probably be $300. (Remember that "available" for incom within 120 days after the end of the calendar year.) 12. Police officers who retired at the end of 2019 will be paid $10 for unused vacation pay on January 6 , 2020 Part B (2)-Chapter 5-Journal entries for Special Revenue Fund transactions The Library Special Revenue Fund commenced calendar year 2019 with a cash balance of $5, no l restricted fund balance of $5. Prepare journal entries to record these transactions in the Library Special Revenue Fund and, where appropriate, in the General Fund.(We suggest you post opening balances and the journal entries to general ledger T-accounts.) 1. The General Fund transferred $100 cash to the Library Special Revenue Fund to help the library finance its iabilities, and a activities for the year The library rec there is no requirement as to when it must be spent. eived a grant of $300 from the county. The grant must be used only for library purposes, but 2. 3. The library received $20 from fines, donations, and various fundraising events 4. The library paid $350 for salaries and S40 to acquire books and periodicals. Charge the B ture salaries and Expenditures-culture supplies accounts, respectively no Continuing Problem art C (1)-Chapter 6 Journal entries for Capital Projects Fund tran t the st art of 2019, Croton's Capital Projects Fund had no assets or liabilities. Prepare appropriate journal en- MBC record thesc transactions in the Capital Projects Fund. (We suggest you post the journal entries to general ledger T-accounts.) 1. Croton undertook construction of a new police station, designed to house both the Croton police and the county sheriff and to serve as a detention center. To finance construction, Croton received a cash grant of 51,000 from the county as an advance pending incurrence of expenditures. It also sold $2,000 of 20-year general obligation bonds. The bonds, sold April 1, 2019, were to be redeemed in equal semiannual install- ments of principal, with interest on the unpaid balance at the rate of 5 percent per annum, starting October 1, 2019 2. Croton awarded two contracts, one for architectural and construction supervision services (5200) and ond 3. The construction contract was completed in a timcly manner, and the contractor submitted an invoice 4. All construction and constr for construction ($2,800) $2,800. The invoice was paid, except that 5 percent was withheld, pending completion of inspection. was paid in full, and the contractor was paid the balance duc uction supervision work was completed. The construction architect/supervisor Part C (2) hapter 6-Journal entries for Debt Service Fund transactions the start of 2019, Croton's Debt Service Fund had no assets or liabilities. Prepare appropriate to record these transactions in the Debt Service Fund and where appropriate, in the General Fund. (We suggest you post opening balances and the journal entries to general ledger T-accounts.) journal entries 1. The General Fund transferred $1,200 cash to the Debt Service Fund 2. The first installment of principal and interest on the bonds sold in Part C (1) came due for payment. 3. The principal and interest due for payment were paid 4. Debt service on bonds sold by Croton in previous years came due and was paid. Principal and interest pay- ments on those bonds were $600 and $470, respectively Chapter 6 Case Study-Having Faith in "Full Faith and Credit ith meneral gbligation debt
