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, $100,000; Taxes Receivable, $200,000; Accounts Payable, $57,500; and Fund Balance, $242,500.
2. The budget was passed. Estimated revenues amounted to $1,300,000 and appropriations totaled $1,296,000. All expenditures are classified as General Government.
3. Property taxes were levied in the amount of $950,000. All of the taxes are expected to be collected before February 2021.
4. Cash receipts totaled $920,000 for property taxes and $315,000 from other revenue.
5. Contracts were issued for contracted services in the amount of $107,500.
6. Contracted services were performed relating to $96,000 of the contracts with invoices amounting to $93,000.
7. Other expenditures amounted to $995,000.
8. Accounts payable were paid in the amount of $1,140,000.
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

In the Books of City of Bufallo Falls :

a) Journal Entries :

Date	Account Titles and Explanation	Debit	Credit
Beginning Balance	Cash	$100,000
	Taxes Receivable	$200,000
	Accounts Payable		$57,500
	Fund Balance		$242,500
	(To record beginning balances of General Fund)
During the Year	Taxes Receivable	$1,300,000
	Estimated Revenue		$1,300,000
	(To record the estimated revenue for the year)
	General Government	$1,296,000
	Accounts Payable		$1,296,000
	(To record the estimated appropriations for the year)
	Property Taxes Receivable	$950,000
	Other Revenue Receivable	$350,000
	Estimated Revenue		$1,300,000
	Cash	$1,235,000
	Property Taxes Receivable		$920,000
	Other Revenue Receivable		$315,000
	(To record the cash receipts)
	Contracts	$107,500
	Accounts Payable		$107,500
	(To record contract for services)
	General Government	$995,000
	Accounts Payable		$995,000
	(To record the other expenditures)
	Accounts Payable	$1,140,000
	Cash		$1,140,000
	(To record payment on account)

b) Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund :

Estimated Revenue	$1,300,000
Less-Expenditure :
Contracts	$107,500
Other Expenditures	$995,000
Changes in Funds	$197,500
Beginning Balance of Fund	$242,500
Ending Balance of Fund	$440,000

c) Balance Sheet for General Fund :

Cash	$195,000
Taxes Receivable	$265,000
Total Assets	$460,000
Accounts Payable	$20,000
Fund Balance	$440,000
Total liabilities plus Fund	$460,000

Working Notes :

i) Cash
Beginning balance	$100,000
Property Taxes	$920,000
Other Revenues	$315,000
Less : Accounts Payable	$1,140,000
Ending balance	$195,000
ii) Taxes Receivable
Beginning balance	$200,000
Estimated Revenue	$1,300,000
Less : Receipts
Proerty Taxes	$920,000
Other Revenues	$315,000
	$265,000
iii) Accounts Payable
Beginning balance	$57,500
Other Expenditures	$995,000
Contracts	$107,500
Less : Payments	$1,140,000
Ending balance	$20,000