Question

In: Accounting

The City of Westboro passed an appropriations ordinance for the year ended June 30, 2012. 10...

The City of Westboro passed an appropriations ordinance for the year ended June 30, 2012. 10 points

Included in the appropriations ordinance was an appropriation for public safety in the amount of $8,600,000. During the month ended July 31, 2012 the following transactions took place:

Purchase orders were issued in the amount of $410,000.

Goods were received, related to purchase orders in the amount of 200,000, along with invoices amounting to $205,000.

Salaries were paid in the amount of $450,000

Because of an economic slowdown, a budget amendment was passed cutting all departments' (annual) appropriations by 4%.

            Required:

            Compute the amount of appropriations available at July 31, 2012.

Answer:

Effect on available appropriations

Balance in Available Appropriations

Original Budget

$ 8,600,000

$ 8,600,000

a. Record Encumbrances

(410,000)

8,190,000

b. Record Expenditures

     Reverse Encumbrances

c. Salaries (Expenditure)

d. Budget Amendment

Solutions

Expert Solution

The City of Westboro

Amount of appropriations available at July 31, 2012.

Effect on available appropriations

Balance in Available Appropriations

Original Budget

$ 8,600,000

$ 8,600,000

a. Record Encumbrances   

(410,000)

$ 8,190,000

b. Record Expenditures

(200000)

$ 7990000

Reverse Encumbrances   

410000   

$ 8400000

c. Salaries (Expenditure)

$(450000)

$7950000

d. Budget Amendment

$(344000)

$7606000

So amount available for the appropriation as on July 31, 2012 is $7606000.

Working :-

Goods received for pruchase orders issued and encumbrance recorded were only worth of $ 200000 so $200000 recorded as expenditure and encumbrance of $ 410000 is reversed from appropriations.

Salary paid $ 450000 is deducted from appropriation

Total budget is reduced by 4% so 4 percent of Total apprppriation of $ 8600000 = $344000 is recorded as budget amendment and reduce from balance of appropriation.


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