Question

General and Subsidiary Ledger Entries; Reconciliation The City of Beverly Heights General Fund had the following transactions, among others, in 20X7:

1. Appropriations were made as follows: Personal Services $111,400 Contractual Services 8,700 Materials and Supplies 8,500 New Patrol Cars 21,000 Other 12,000 $161,600

2. General Fund cash, $2,000, was paid to a Debt Services Fund to provide for debt service.

3. A long-term note of $8,300, including interest of $1,300, and a short-term note of $2,500 (including $150 interest) came due. The Beverly Heights Council had not made appropriations for these items. The necessary action was taken, and the notes and interest were paid.

4. General Fund cash, $100,000, was paid to an Enterprise Fund to finance construction of a new auxiliary generator, and $50,000 was contributed to establish a central motor pool facility. The Enterprise Fund will repay the General Fund in 10 equal annual installments beginning January 1, 20X9.

5. The council increased the appropriation for personal services by $500.

6. Materials and supplies are accounted for on the purchases method. The beginning inventory was $200; $8,500 of materials and supplies were ordered during the year. A new patrol car costing $20,000 was also ordered.

7. The following expenditures were made by the city: Personal Services $111,700 Contractual Services 8,700 Materials and Supplies 7,500 New Patrol Cars 21,200 Other 11,800 $160,900

8. The new patrol cars were received. The balance of the materials order is expected early next year. The council passed amendments to its appropriations necessary to make the foregoing expenditures legal. The expenditures were paid.

9. Materials and supplies on hand at year end amounted to $1,000.

REQUIRED: (a) Prepare the general journal entries required to record the transactions in the General Ledger and in the Expenditures Ledger of the Beverly Heights General Fund. Assume that there were no outstanding encumbrances at the end of 20X6.

(b) Prepare a trial balance of the Expenditures Ledger and prove its agreement with the General Ledger control accounts.

Answer 1

Solution:-

(a) Prepare the general journal entries required to record the transactions in the General Ledger and in the Expenditures Ledger of the Beverly Heights General Fund. Assume that there were no outstanding encumbrances at the end of 20X6:-

	Particulars	Debit	Credit
1.	Beverly Heights General Fund	$161,600
	New Patrol Cars fund		$21,000
	Material and supplies fund		$8,500
	Contractual services fund		$8,700
	Personal service fund		$111,400
	Other funds		$12,000
2.	Beverly Heights General Fund	$2,000
	debt service fund		$2,000
	debt service fund	$2,000
	Bank		$2,000
3.	Beverly Heights General Fund	$10,800
	Long term note fund	$7,000
	Short term funds	$2,350
	Interest funds	$1,450
	Bank		= 7,000 + 2,350 + 1,450 = $10,800
4.	General Fund	$100,000
	Enterprise fund	$50,000
	Bank		= $50,000 + $100,000 = $150,000
5.	Beverly Heights General Fund	$500
	personal services fund		$500
6.	Material supplies	$200
	Inventory		$200
7&8	Materials and supplies	= 8,500 - 7,500 =$1,000
	Other funds	$200
	Personal services	=  [$111,400 + 500] - $111,700 = $200
	New Patrol Cars funds		= 21,200 -  21,000 = $200
	Beverly Heights General Fund		= 900 + 200 + 200 - 200 = $1,100
	Other funds	$11,800
	Bank		$160,900
	Material and supplies payables		$100
9.	Inventory	$1,000
	Materials and supplies on hand		$1,000

(b) Prepare a trial balance of the Expenditures Ledger and prove its agreement with the General Ledger control accounts:-

Account names	Amount	Amount
Beverly Heights General Fund	= 161,600 + 2,000 + 10,800 + 500 - 1,100 = $173,800
Bank		= 2,000 + 10,800 + 150,000 + 160,900 = $323,700
Enterprise funds	= 100,000 + 50,000 = $150,000
Material supplies		= 1,000 - 200 = $800
Inventory	$800
Material and supplies payable		$100
Total	= 173,800 + 150,000 + 800 = $324,600	= 323,700 + 800 + 100 = $324,600