38
89) During fiscal year 2020, the Town of Tonawanda issued purchase orders to various vendors in
the amounts shown for the following functions of the town:
General Government
$
82,500
Public Safety
148,700
Public Works
130,400
Culture and Recreation
97,300
Health and Welfare
94,800
Miscellaneous
14,200
Total
$
567,900
All goods ordered during the year were received at the following actual costs:
General Government
$
83,720
Public Safety
147,940
Public Works
131,140
Culture and Recreation
98,780
Health and Welfare
93,970
Miscellaneous
14,300
Total
$
569,850
a. Prepare a summary journal entry in the General Fund general journal to record the issuance of
purchase orders during fiscal year 2020. (If no entry is required for a transaction/event, select
“No Journal Entry Required” in the first account field.)
b. Prepare summary journal entries in the General Fund general journal to record the receipt of and
payment for goods during fiscal year 2020. (If no entry is required for a transaction/event,
select “No Journal Entry Required” in the first account field.)
39
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Answer: TOWN OF TONAWANDA
General Ledger
Debits Credits
a. General Fund:
ENCUMBRANCES—2020 567,900
ENCUMBRANCES
OUTSTANDING—2020 567,900
b. General Fund:
ENCUMBRANCES
OUTSTANDING—2020 567,900
ENCUMBRANCES—2020 567,900
EXPENDITURES—2020 569,850
VOUCHERS PAYABLE 569,850
Explanation: No further explanation details are available for this problem.
Difficulty: 2 Medium
Topic: Encumbrances and Purchasing Transactions
Learning Objective: 04-01 Analyze typical operating transactions for governmental activities
and prepare appropriate journal entries at both the government-wide and fund levels.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
40
90) The following transactions occurred for the City of Fontaine’s General Fund.
1. The budget prepared for the fiscal year included Total estimated revenues of $2,774,000 and
appropriations of $2,693,000.
2. Encumbrances issued against the appropriations during the year were $931,000.
3. The current year’s tax levy of $2,005,000 was recorded; uncollectibles were estimated as
$65,000.
4. Collections of delinquent taxes from prior years’ levies totaled $132,000; collections of the
current year’s levy totaled $1,459,000.
5. Invoices were received and approved for payment for items ordered in documents recorded as
encumbrances in Transaction (2) of this problem. The estimated liability was $851,200. Actual
costs were $850,500.
6. Revenue other than taxes collected during the year consisted of licenses and permits, $373,000;
intergovernmental revenue, $400,000; and $66,000 of miscellaneous revenues.
7. Payments on Vouchers Payable totaled $1,505,000.
Prepare the journal entry. (If no entry is required for a transaction/event, select “No Journal
Entry Required” in the first account field.)
41
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Answer: CITY OF FONTAINE—JOURNAL ENTRIES
GENERAL LEDGER
Explanation: No further explanation details are available for this problem.
Difficulty: 2 Medium
Topic: Illustrative Journal Entries
Learning Objective: 04-01 Analyze typical operating transactions for governmental activities
and prepare appropriate journal entries at both the government-wide and fund levels.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
42
91) During the current year, the Town of Salo Alto recorded the following transactions related to
its property taxes:
1. Levied property taxes of $3,300,000, of which 2 percent is estimated to be uncollectible.
2. Collected current property taxes amounting to $2,987,500.
3. Collected $26,500 in delinquent taxes and $2,400 in interest and penalties on the delinquent
taxes. These amounts had been recorded as Deferred Inflows of Resources in the prior year.
4. Imposed penalties and interest in the amount of $3,750 but only expects to collect $3,100 of that
amount. None is expected to be collected this year or within 30 days of year-end.
5. Reclassified uncollected taxes as delinquent. These amounts are not expected to be collected
within the first 60 days of the following fiscal year.
Prepare the journal entry. (If no entry is required for a transaction/event, select “No Journal
Entry Required” in the first account field.)
43
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Answer: TOWN OF SALO ALTO—JOURNAL ENTRIES
GENERAL LEDGER
44
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
(The deferred inflow is equal to property tax revenue recognized that has not been collected
[3,234,000-2,987,500].)
Explanation: No further explanation details are available for this problem.
Difficulty: 2 Medium
Topic: Accounting for Property Taxes
Learning Objective: 04-01 Analyze typical operating transactions for governmental activities
and prepare appropriate journal entries at both the government-wide and fund levels.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting