Question

The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2020:

1. Beginning balances were: Cash, $105,000; Taxes Receivable, $207,500; Accounts Payable, $61,250; and Fund Balance, $251,250.
2. The budget was passed. Estimated revenues amounted to $1,350,000 and appropriations totaled $1,345,000. All expenditures are classified as General Government.
3. Property taxes were levied in the amount of $975,000. All of the taxes are expected to be collected before February 2021.
4. Cash receipts totaled $945,000 for property taxes and $327,500 from other revenue.
5. Contracts were issued for contracted services in the amount of $116,250.
6. Contracted services were performed relating to $103,500 of the contracts with invoices amounting to $99,500.
7. Other expenditures amounted to $1,017,500.
8. Accounts payable were paid in the amount of $1,172,000.
9. The books were closed.

Required:
a. Prepare journal entries for the above transactions.
b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund.
c. Prepare a Balance Sheet for the General Fund assuming there are no restricted or assigned net resources and outstanding encumbrances are committed by contractual obligation.

Answer 1

SOLUTION:

A)JOURNAL ENTRIES:

S.NO.	PARTICULARS	DEBIT($)	CREDIT($)
1	ESTIMATED REVENUE CONTROL A/C	1350000
	TO APPROPRIATION A/C		1345000
	TO BUDGETARY FUND A/C (Being the budget passed)		5000
2	TAXES RECEIVABLE A/C	975000
	TO REVENUE A/C		975000
3	CASH A/C	1272500
	TO TAX RECEIVABLE A/C		945000
	TO REVENUE A/C		327500
4	ENCUMBRANCES CONTROL A/C	116250
	TO BUDGETARY FUND A/C		116250
5	BUDGETARY FUND A/C	103500
	TO ENCUMBRANCES CONTROL A/C		103500
6	EXPENDITURE CONTROL A/C	99500
	TO ACCOUNTS PAYABLE A/C		99500
7	EXPENDITURE CONTROL A/C	1017500
	TO ACCOUNTS PAYABLE A/C		1017500
8	ACCOUNTS PAYABLE A/C	1172000
	TO CASH A/C		1172000
9	APPROPRIATION A/C	1345000
	BUDGETARY FUND A/C	5000
	TO ESTIMATED REVENUE CONTROL A/C		1350000
10	BUDGETARY FUND A/C(116250-103500)	12750
	TO ENCUMBRANCES A/C		12750
11	REVENUE A/C	1302500
	TO EXPENDITURE CONTROL A/C		1117000
	TO FUND BALANCE A/C		185500

B)STATEMENT OF REVENUE,EXPENDITURE AND CHANGES IN FUND BALANCE

PARTICULARS	AMOUNT($)
REVENUE:
TAXES	945000
OTHER REVENUE	327500
TOTAL REVENUE	1272500
LESS:
CONTRACT SERVICES	(99500)
OTHERS	(1017500)
SURPLUS	155500
ADD: OPENING FUND BALANCE	251250
CLOSING FUND BALANCE	406750

C)BALANCE SHEET

ASSETS	AMOUNT($)
CASH (105000+1272500-1172000)	205500
TAXES RECEIVABLE	207500
TOTAL ASSETS	413000
LIABILITIES & FUND BALANCES:
LIABILITIES
ACCOUNTS PAYABLE (61250+99500+1017500-1172000)	6250
FUND BALANCES:
Contract Services committed (116250-103500)	12750
Others(406750-12750)	394000
TOTAL LIABILITIES	413000

WORKING :

STEP 11 REVENUE=REVENUE(STEP 2)+REVENUE A/C (STEP3)+ESTIMATED REVNUE CONTOL(STEP9)-(STEP1 ESTIMATED REVENUE CONTROL)

=975000+327500+1350000-1350000

=1302500

OTHERS (406750-12750)

CLOSING FUND BALANCE=406750 which is given in statement of revenue and expenditure

CONTRACT SERVICES COMMITTED =116250-103500=12750

IF you have any other doubt,ask

And please upvote.