Prepare the journal entries for the events listed below for the capital projects
ID: 2455727 • Letter: P
Question
Prepare the journal entries for the events listed below for the capital projects funds.
The state government established a capital project fund in 2014 to build new highways. The fund is supported by a 5% tax on diesel fuel in the state. The tax is collected by private gas stations and remitted in the following month to the State.
Capital Project Fund Trial Balance:
12/31/2014
Cash $9,700,000
Taxes receivable 2,750,000
Contracts payable 1,850,000
Fund Balance 10,600,000
Question Prepare Journal Entry 1: $1,857,000 of encumbrances outstanding at 12/31/2014, were reestablished.
Explanation / Answer
The journal entry for the reestabilishment of the outstanding encumbrances would be as follows:
Debit to Encumbrances outstanding and credit to Budgetary Fund Balance-Reserve for Encumbrances.
Encumbrances outstanding 1,857,000
Budgetary Fund Balance-Reserve for Encumbrances 1,857,000