In: Accounting
At year-end, an analysis by the city’s finance department determined the following constraints on fund balances in the General Fund. Prepare the appropriate closing/reclassification journal entry in the General Fund to reclassify amounts between Fund Balance—Unassigned and the fund balance accounts corresponding to the constraints shown below. (Note: You should consider the beginning of year balances in fund balance accounts in calculating the amounts to be reclassified. Be sure the check mark in the box for [Closing Entry] is showing before closing each individual account.)
Account Ending Balance
Fund Balance—Committed—General Government $30,000
Fund Balance—Restricted—Public Safety 36,000
Fund Balance—Committed—Public Works 12,700
Fund Balance—Assigned—Culture and Recreation 0
Closing journal entry:
Closing journal entries are prepared at the end of the accounting period. These entries close the temporary accounts, which are recorded under the income statement, which are transferred to the balance sheet in their respective permanent accounts.
Journal Entry | ||
Account title and Explanation | Debit | Credit |
Committed - General Government | 30000 | |
Restricted Pubic safety | 36000 | |
Committed public work | 12700 | |
Assigned culture and research | 0 | |
Uncommitted - General Government | 30000 | |
Unrestricted Pubic safety | 36000 | |
Uncommitted public work | 12700 | |
Unassigned culture and research | 0 |
(being the credit balance of funds assigned and credited to unassigned baances)
Explanation to the accounting effects:
Committed-general government, restricted public safety, and committed public work are the funding accounts, and they are debited to close the temporary accounts, and transfer them to the owners' equity or liability accounts. Thus Uncommitted general government, unrestricted public safety, uncommitted public work, and unassigned culture and research are credited as they increases the liability, that increases the owners' equity.