Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-38
Ch. 4, Solutions, Exercise 4-26 b. (Cont’d)
Debits Credits
6. FUND BALANCE—NONSPENDABLE 10,000
INVENTORY OF SUPPLIES 10,000
c. JEDVILLE TOWNSHIP—JOURNAL ENTRIES
GOVERNMENTAL ACTIVITIES
1. NO JOURNAL ENTRY REQUIRED
2. INVENTORY OF SUPPLIES 850,000
CASH 850,000
4. NO JOURNAL ENTRY REQUIRED
5. INVENTORY OF SUPPLIES 860,000
CASH 860,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-39
Ch. 4, Solutions, Exercise 4-26 (Cont’d)
CONSUMPTION METHOD – 2022
Inventory of Supplies .
4/4/22 850,000
Expenditures
Various 780,000 12/31/22 780,000
Fund Balance-Nonspendable .
12/31/22 70,000
Bal. 70,000
PURCHASES METHOD – 2022
Supplies Inventory .
12/31/22 70,000
Bal. 70,000
Fund Balance-Unassigned .
12/31/22 850,000
Bal. 850,000
Fund Balance-Nonspendable .
12/31/22 70,000
Bal. 70,000
GOVERNMENTAL ACTIVITIES – 2022
Inventory of Supplies .
4/4/22 850,000
CONSUMPTION METHOD – 2023
Inventory of Supplies .
Bal. 70,000
Expenditures .
Various 870,000 12/31/23 870,000
Fund Balance-Nonspendable .
Beg. 70,000
12/31/23 10,000
Bal. 60,000
PURCHASES METHOD – 2023
Inventory of Supplies .
Beg. 70,000
12/31/23 10,000
Bal. 60,000
Expenditures .
Fund Balance-Unassigned .
Beg. 850,000
12/31/23 860,000
Bal. 1,710,000
Fund Balance-Nonspendable .
Beg. 70,000
12/31/23 10,000
Bal. 60,000
GOVERNMENTAL ACTIVITIES – 2023
Inventory of Supplies .
Bal. 70,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-40
Ch. 4, Solutions, Exercise 4-26 (Cont’d)
NOTE: Fund balance and net position balances are not required but can be used to
demonstrate that the net effects of each method on total fund balance and net
position are the same under all methods.
d. Under both the accrual accounting and the consumption method of
accounting for inventory, expenses and expenditures were equal to the
e. Under each method, the balance of Supplies Inventory will be $70,000 and
$60,000 for 2022 and 2023, respectively. In the governmental funds, these
amounts will also be included in Fund Balance—Nonspendable. There is no
such designation at the government-wide level.
General Problem Information: Comparison of inventory methods
Learning Objective: 4-1, 4-2
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-41
Ch. 4, Solutions (Cont’d)
4-27. a. CITY OF CASTLETON
JOURNAL ENTRIES FY 2023
Debits Credits
General Fund:
1. ESTIMATED REVENUES 3,140,000
APPROPRIATIONS 3,000,000
2. CASH 500,000
TAX ANTICIPATION NOTES PAYABLE 500,000
General Fund:
3. TAXES RECEIVABLE⎯CURRENT 2,150,000
ALLOWANCE FOR UNCOLLECTIBLE
CURRENT TAXES 64,500
REVENUES 2,085,500
General Fund:
4. ENCUMBRANCES⎯2023 2,060,000
ENCUMBRANCES OUTSTANDING⎯2023 2,060,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-42
Ch. 4, Solutions, Exercise 4-27 a. 3. (Cont’d)
Debits Credits
General Fund and Governmental Activities:
5. CASH 2,078,840
TAXES RECEIVABLE⎯CURRENT 1,961,000
General Fund:
DEFERRED INFLOWS OF RESOURCES⎯
UNAVAILABLE REVENUES 106,840
REVENUES 106,840
General Fund:
6. INTEREST AND PENALTIES RECEIVABLE 3,430
ALLOWANCE FOR UNCOLLECTIBLE INTEREST
AND PENALTIES 1,029
General Fund:
7. BUDGETARY FUND BALANCE 80,000
ESTIMATED REVENUES 80,000
(THIS ENTRY ADJUSTS THE ORIGINAL BUDGETARY INCREASE OF $40,000 IN
BUDGETARY FUND BALANCE TO A NET DECREASE OF $40,000.)
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-43
Ch. 4, Solutions, Exercise 4-27 a. (Cont’d)
Debits Credits
General Fund and Governmental Activities:
8. ALLOWANCE FOR UNCOLLECTIBLE
DELINQUENT TAXES 12,792
ALLOWANCE FOR UNCOLLECTIBLE INTEREST
General Fund:
9. EXPENDITURES⎯2023 819,490
DUE TO FEDERAL GOVERNMENT 166,400
DUE TO STATE GOVERNMENT 34,400
CASH 618,690
Governmental Activities:
EXPENSES⎯(function details omitted) 819,490
General Fund:
10. EXPENDITURES⎯2023 62,690
DUE TO FEDERAL GOVERNMENT 62,690
Governmental Activities:
General Fund:
11. CASH 935,000
SALES TAXES RECEIVABLE 12,000
REVENUES 947,000
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-44
Ch. 4, Solutions, Exercise 4-27 a. 11. (Cont’d)
Debits Credits
Governmental Activities:
CASH 935,000
SALES TAXES RECEIVABLE 12,000
REVENUES⎯(itemize as program
or general and by source) 947,000
General Fund and Governmental Activities:
12. DUE TO FEDERAL GOVERNMENT 258,580
General Fund:
13. ENCUMBRANCES OUTSTANDING⎯2023 1,988,040
ENCUMBRANCES⎯2023 1,988,040
EXPENDITURES⎯2023 1,887,570
General Fund:
14. VOUCHERS PAYABLE 2,101,660
CASH 2,093,630
EXPENDITURES⎯2023 8,030
Governmental Activities:
VOUCHERS PAYABLE 2,101,660
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-45
Ch. 4, Solutions, 4-27, a. (Cont’d)
Debits Credits
General Fund:
15. TAX ANTICIPATION NOTES PAYABLE 500,000
EXPENDITURES 10,000
CASH 510,000
General Fund:
16. OTHER FINANCING USES—INTERFUND
TRANSFERS OUT 100,000
CASH 100,000
General Fund and Governmental Activities:
17. TAXES RECEIVABLE—DELINQUENT 189,000
TAXES RECEIVABLE—CURRENT 189,000
General Fund:
REVENUES 126,901
DEFERRED INFLOWS OF RESOURCES⎯
UNAVAILABLE REVENUES 126,901
(THIS ADJUSTS FOR THE NET PROPERTY TAXES [$189,000-64,500] AS WELL AS THE NET
INTEREST AND PENALTIES FROM ENTRY 6 [$2,401] THAT ARE NOT “AVAILABLE”.)
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-46
Ch. 4, Solutions, 4-27, a. (Cont’d)
Debits Credits
General Fund:
18. INVENTORY OF SUPPLIES 3,000
FUND BALANCE—NONSPENDABLE—
INVENTORY OF SUPPLIES 3,000
Governmental Activities:
No entry required – expenses are recorded periodically.
Debits Credits
b. CLOSING ENTRIES, JUNE 30, 2023
General Fund:
APPROPRIATIONS 3,000,000
ESTIMATED OTHER FINANCING USES 100,000
REVENUES 3,014,840
EXPENDITURES—2023 2,771,720
Governmental Activities:
(Not closed here since the governmental activities general ledger includes
operating statement transactions related to all governmental funds, not
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-47
Ch. 4, Solutions, Exercise 4-27 (Cont’d)
c.
CITY OF CASTLETON
GENERAL FUND BALANCE SHEET
AS OF JUNE 30, 2023
ASSETS
CASH $ 456,640
SALES TAXES RECEIVABLE 12,000
TAXES RECEIVABLE⎯DELINQUENT $255,938
LESS: ALLOWANCE FOR UNCOLLECTIBLE
TAXES⎯DELINQUENT 73,668 182,270
LIABILITIES AND FUND BALANCES
LIABILITIES:
VOUCHERS PAYABLE $127,390
TOTAL LIABILITIES AND DEFERRED INFLOWS
OF RESOURCES 313,611
FUND BALANCES:
NONSPENDABLE—INVENTORY
OF SUPPLIES $ 9,100
UNASSIGNED 341,250
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-48
Ch. 4, Solutions, Exercise 4-27 (Cont’d)
d. CITY OF CASTLETON
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2023
REVENUES
TAXES $2,901,270
INTEREST AND PENALTIES ON TAXES 3,570
EXPENDITURES
SALARIES AND WAGES 882,180
INTEREST ON NOTES PAYABLE 10,000
OTHER 1,879,540
TOTAL EXPENDITURES 2,771,720
EXCESS OF REVENUES OVER EXPENDITURES 243,120
FUND BALANCES, JULY 1, 2022 204,230
FUND BALANCES, JUNE 30, 2023 $ 350,350
Computations:
Taxes = [(3) 2,085,500 + (5) 106,840 – (5) 3,570 + (6) 2,401 + (11) 837,000 − (17)
126,901]
Interest and Penalties on Taxes = [(5) 3,570]
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-49
Ch. 4, Solutions, Exercise 4-27 d. (Cont’d)
NOTE: The Governmental Activities general ledger is not shown here.
CITY OF CASTLETON
General Fund
General Ledger (Not Required)
Cash Interest and Penalties Rec.__ ____
7/1/2022 Bal. 265,120 (9) 618,690 7/1/2022 Bal. 6,280 (5) 3,570
(2) 500,000 (14) 2,093,630 (6) 3,430 (8) 952
Sales Taxes Receivable Allow. for Uncoll. Interest & Penalties _
7/1/2022 Bal. 11,000 (5) 11,000 7/1/2022 Bal. 1,160
(11) 12,000 (8) 952 (6) 1,029
6/30/2023 Bal. 12,000 6/30/2023 Bal. 1,237
6/30/2023 Bal. –0- 6/30/2023 Bal. 9,100
Allow. for Uncoll. Current Taxes
4-27(17) 64,500 (3) 64,500
6/30/2023 Bal. -0-
Taxes Receivable⎯Delinquent
7/1/2022 Bal. 183,000 (5) 103,270
(17) 189,000 (8) 12,792
6/30/2023 Bal. 255,938
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-50
Ch. 4, Solutions, Exercise 4-27 d. (Cont’d)
Due to Federal Government Revenues____________
(12) 258,580 7/1/2022 Bal. 29,490 (17) 126,901 (3) 2,085,500
(9) 166,400 b 3,014,840 (5) 106,840
Due to State Government Expenditures⎯2023_________
(12) 34,400 (9) 34,400 (9) 819,490 (14) 8,030
6/30/2023 Bal. -0- (10) 62,690 b 2,771,720
Deferred Inflows of Resources—
Tax Anticipation Notes Payable ____Unavailable Revenues _
(15) 500,000 (2) 500,000 7/1/2022 Bal. 166,160
6/30/2023 Bal. -0- (5) 106,840 (17) 126,901
6/30/2023 Bal. 186,221
Fund Balance—Nonspendable—
Fund Balance—Unassigned ____Inventory of Supplies _
Estimated Revenues ____ Encumbrances⎯2023__________
(1) 3,140,000 (7) 80,000 (4) 2,060,000 (13) 1,988,040
b 3,060,000 6/30/2023 Bal. 71,960
Appropriations Encumbrances Outstanding⎯2023___
b 3,000,000 (1) 3,000,000 (13) 1,988,040 (4) 2,060,000
6/30/2023 Bal. 71,960
Budgetary Fund Balance
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-51
Ch. 4, Solutions, 4-27 (Cont’d)
General Problem Information: Operating transactions and financial statements
Learning Objective: 4-1
Learning Objective: 4-2
Learning Objective: 4-3
4-28. a CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
GENERAL JOURNAL
FOR YEAR ENDED JUNE 30, 2023
Debits Credits
1. CASH 1,500,000
2. INVESTMENT IN BONDS 406,300
CERTIFICATE OF DEPOSIT 1,000,000
CASH 1,406,300
3. CASH 16,000
4. OTHER FINANCING USES—INTERFUND
TRANSFERS OUT 16,000
CASH 16,000
5. INVESTMENT IN BONDS 3,300
REVENUES—CHANGE IN FAIR VALUE
OF INVESTMENTS 3,300
Chapter 04 – Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements
4-52
Ch. 4, Solutions, Exercise 4-28 a. (Cont’d)
ADJUSTING ENTRIES: NONE REQUIRED.
CLOSING ENTRIES: Debits Credits
REVENUES—CONTRIBUTIONS FOR
ENDOWMENT 1,500,000
REVENUES—INVESTMENT EARNINGS—BONDS 6,000
OTHER FINANCING USES—INTERFUND
TRANSFERS OUT 16,000
b. (1) CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
BALANCE SHEET
AS OF JUNE 30, 2023
ASSETS
CURRENT ASSETS:
CASH $ 93,700
TOTAL CURRENT ASSETS 93,700
INVESTMENTS:
FUND BALANCE
FUND BALANCE:
NONSPENDABLE—PRINCIPAL OF ENDOWMENT 1,503,300
TOTAL FUND BALANCE $1,503,300
(2) CITY OF FOUNTAINS
PONCE DE LEON ENDOWMENT FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE
FOR YEAR ENDED JUNE 30, 2023
REVENUES RECEIVED FOR CONTRIBUTION TO ENDOWMENT $1,500,000
REVENUES EARNED FOR TRANSFER TO
EXPENDABLE TRUST FUND:
REVENUES FROM CHANGE IN FAIR VALUE
OF INVESTMENTS 3,300
TOTAL REVENUES 1,519,300
OTHER FINANCING USES:
OPERATING TRANSFERS TO
c. The fund is a permanent fund, more specifically a public-purpose trust
fund. Permanent funds that are nonexpendable usually do not require
budgetary entries, but if this were an expendable fund, laws might require
the use of budgetary control. That does not preclude the city from
preparing a budget based upon expected investment earnings.
General Problem Information: Permanent fund accounting
Learning Objective: 4-6
Topic: Permanent Funds