Problem 5. A summary of the general fund transactions for the city of Wautoma fo
ID: 2523681 • Letter: P
Question
Problem 5. A summary of the general fund transactions for the city of Wautoma for the year end December 31, 2016, is as follows: A. A budget was approved, showing estimated revenues of $900,000, appropriations S875,000, transfers in of $27,000 from other funds, and required transfers of $20,000 to other funds. B. The reserve for encumbrance at the end of 2015 was $25,000. Amounts encumbered in the prior period are included in appropriations for 2016 C. Property taxes for $650,000 were levied. In past years, 1% of the property taxes levied proved uncollectible D. Encumbrances for $25,000 had not been liquidated by the end of 2015 (see B). Invoices for all these items were received in 2016 and totaled $24,000. E. Collections from property taxes totaled $644,000, of which $20,000 represented collections on delinquent taxes. Delinquent taxes of $8,000 remain uncollected, on which a S3,000 allowance is carried Remaining taxes Receivable -current and taxes receivable - delinquent were converted into taxes receivable -delinquent and tax liens receivable, respectively. F. Purchase orders totaling $750,000 were issued. Subsequently, invoices were received amounting to S685,000 for items estimated to cost $680,000. Included were supplies for $10,000. G. An ending inventory of supplies amounted to $2,000, for which the fund balance should be reserved (there was no beginning inventory balance.) H. Wautoma received S300,000 as its part of federal revenue-sharing programs. Grants-in-aid of $60,000 due from the state government are recorded. None of the grants is expenditure driven. I. Required transfers of $20,000 are made to other funds. J. A S50,000 payment is made on a mortgage payable. The payment includes $21,000 of interest anda principal payment of $29,000 K. Transfers received from other funds amount to $23,000. Instructions 1. Prepare journal entries to record the general fund transactions. 2. Prepare closing entries for the general fundExplanation / Answer
Ans 1
Transfer in from Other Funds to General Funds:
Other Fund A/c Dr $27,000
To General Fund A/c Cr $27,000
Transfer out to Other Funds from General Funds:
General Fund A/c Dr $20,000
To Other Fund A/c Cr $20,000
Reserve for Uncollectible property tax:
Provision for Uncollectible Property tax (Expense) Dr $ 6,500
To Provision for Uncollectible property tax (Liability) Cr $ 6,500
Invoices reserved towards reserve for encumbrances:
Reserve for uncumbrances (Liability) Dr $24,000
To Payable towards uncumbrances (Liability) Cr $24,000
Provision on Delinquent taxes :
Provision for Delinquent taxes (Expense) Dr $ 3,000
To Reserve for Delinquent taxes (Liabilty) Cr $3,000
Provision for Purchases :
Provision for purchases of Supplies (Expense) Dr $ 10,000
To Privision for Supplies (Liability) Cr $10,000
Inventory :
Inventory (asset) Dr $2,000
To Cost of Supplies Cr $2,000
Grant in aid :
Grant receivable Dr $60,000
To Grant income Cr $60,000
Transfer to other Funds:
General Fund Dr $20,000
To Other Fund Cr $20,000
Morgage payable :
Interest expenses Dr $ 21,000
Morgage liability Dr $ 29,000
To Liability towards Morgage payable Cr $50,000
Transfer from Other fund :
Other Fund Dr $ 23,000
To General Fund Cr $23,000