In: Accounting
On July 1, the start of its fiscal year, Lavaca County reported the following balances ($ in thousands):
Fund balance:
Committed for encumbrances $400
Unassigned $800
Total fund balance $1,300
During the year, the county ($ in thousands):
• Estimated that revenues for the year would be $13,400
• Appropriated $13,000 for operations.
• Ordered supplies estimated to cost $12,000. Of these, the county received (and paid) supplies that it had estimated would cost $11,300. Actual cost, however, was $11,800.
• Received (and paid) all goods that it had ordered in the previous year. Actual cost was only $380.
• Recognized actual revenues of $13,700 (cash received).
REQUIREMENT:
(1)Record all journal entries including the closing entries.
(2)Show how the total fund balance (including the unassigned and committed portions) would be displayed at year-end.
Answer:
Kindly see explanation for the answers and summary of answers with files attached.
Step-by-step explanation
This is the required journal entries . For the purchases, since it did not show what entry was made, I just answered the normal entry made as if it was purchased and paid in cash.
JOURNAL ENTRIES | ||
Office Supplies | 12000 | |
Accounts Payable | 12000 | |
Accounts Payable | 11300 | |
Cash | 11300 | |
Accounts Payable | 500 | |
Cash ($11,800 - $11,300) | 500 | |
(To record deficit of actual amount) | ||
Accounts Payable ($12,000 - $11,800) | 200 | |
Office Supplies | 200 | |
(To record excess of estimate on original journal entries made) | ||
Purchase | 380 | |
Cash | 380 | |
Cash | 13700 | |
Revenue | 13700 |
.
For closing entries,
since the question did not include whether there were unused office supplies, it need not be made another adjusting and closing entries: but this is usually closed at the end of the year.
Closing entries are made to temporary accounts--EXPENSES and REVENUE and are closed to Income Summary account to bring their balances to zero.
CLOSING ENTRIES | ||
Revenue | 13700 | |
Income Summary | 13700 | |
Income Summary | 380 | |
Purchases | 380 |
And lastly, for the Fund Balance at year end, (see attached files) you need to deduct the appropriations and add it to committed fund because it is now a committed fund, and not an unassigned one.