Question
Record the appropriate journal entries for Johnson City for the following transactions. The city uses encumbrance accounting and maintains a provision for uncollectible accounts. Note:
Record the appropriate journal entries for Johnson City for the following transactions. The city uses encumbrance accounting and maintains a provision for uncollectible accounts.
Note: Each transaction may involve more than one fund. The appropriate fund must be identified to receive credit.
1. The General Fund operating budget was approved. It included estimated revenues of $1,200,000, estimated other financing sources of $300,000, appropriations of $1,150,000, and estimated other financing uses of $100,000.
2. The Police Department paid its salaries of $50,000.
3. The City sold $5 million in general obligation bonds to finance the construction of a new fire station.
4. The fire chief ordered $1,000 of supplies.
5. The property tax for the year was levied by the General Fund. The total amount of the tax was $500,000. City officials estimated that 90 percent would be collected.
6. The supplies ordered in transaction 4 arrived, along with an invoice for $1,025. The excess amount was approved, and a check was sent to the supplier.
7. General obligation bonds debt principal matured, and the final interest payment became due. These amounts were $75,000 and $7,500, respectively. The General Fund transferred the amounts to the Debt Service Fund. The Debt Service Fund paid the bondholders.
8. The police department ordered 3 new cars at a cost of $50,000 each.
9. The City received a gift of $300,000 with the stipulation that the principal must be maintained in perpetuity and that all earnings on investments be used solely for the purchase of library books. The city established a Permanent Fund and deposited the donation.
10. The entire gift was immediately invested in various securities. The investments earned $30,000 in dividends and interest during the year.
11. Collections of property taxes during the year totaled $490,000.
12. Two cars (transaction 8) were received with an invoice for $102,000.
13. A $2,000,000 contract was signed with a developer as part of the fire station construction.
14. The developer submitted a progress billing for $100,000. The contract includes provisions for a 10% retained percentage.
15. The invoice for the cars (transaction 12) was paid.
16. Prepare the closing entries for the General Fund Budget.
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