Question

4–11.

Jefferson County’s General Fund began the year 2017 with the following account balances:

	Debits		Credits
Cash	$132,348
Taxes Receivable	47,220
Allowance for Uncollectible Taxes			$ 1,570
Supplies	660
Deferred Inflows—Property Taxes			21,000
Wages Payable			900
Fund Balance			156,758
Totals	$180,228		$180,228

During 2017, Jefferson experienced the following transactions:

The budget was passed by the County Commission, providing estimated revenues of $285,000 and appropriations of $235,000 and estimated other financing uses of $40,000.

Encumbrances totaling $4,800 outstanding at December 31, 2016, were re-established.

The Deferred Inflows—Property Taxes at December 31, 2016, is recognized as revenue in the current period.

Property taxes in the amount of $290,000 were levied by the County. It is estimated 0.5 percent (1/2 of 1 percent) will be uncollectible.

Property tax collections totaled $263,400. Accounts totaling $1,020 were written off as uncollectible.

Encumbrances were issued for supplies in the amount of $37,100.

Supplies in the amount of $40,500 were received. Jefferson County records supplies as an asset when acquired. The related encumbrances for these items totaled $41,000 and included the $4,800 encumbered last year. The County paid $37,800 on accounts payable during the year.

The County contracted to have alarm systems (capital assets) installed in the administration building at a cost of $46,000. The systems were installed and the amount was paid.page 115

Paid wages totaling $135,900, including the amount payable at the end of 2016. (These were for general government operations.)

Paid other general government operating items of $7,600.

The General Fund transferred $43,000 to the debt service fund in anticipation of bond interest and principal payments.
Additional Information

Wages earned but unpaid at the end of the year amounted to $1,050.

Supplies of $350 were on hand at the end of the year. (Supplies are used for general government operations.)

A review of property taxes receivable indicates that $22,000 of the outstanding balances would likely be collected more than 60 days after year-end and should be deferred.

Required:

Use the Excel template provided on the textbook website to complete the following requirements. A separate tab is provided in Excel for the following items:

Prepare journal entries to record the information described in items 1 to 14. Classify expenditures in the General Fund as either General Government or Capital Outlay. Make entries directly to these and the individual revenue accounts; do not use subsidiary ledgers.

Post these entries to T-accounts.

Prepare closing journal entries; post to the T-account provided. Classify fund balances assuming there are no restricted or committed net resources and the only assigned net resources are the outstanding encumbrances.

Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund for the year ending 2017. Use Excel formulas to calculate the cells shaded in blue.

Prepare a Balance Sheet for the General Fund as of December 31, 2017.

Excel-Based Problems

5–12.

Jefferson County established a capital project fund in 2016 to build low-income housing with the transfer of $100,000 from the General Fund. A portion of that was expended on engineering studies in 2016. The following transactions occurred during 2017:

Capital Project Fund Trial Balance: December 31, 2016
	Debits	Credits
Cash	$68,000
Fund Balance		$68,000

April 1, 2017, 4 percent bonds with a face value of $800,000 were issued in the amount of $821,000. The bond premium was transferred to the debt service fund.

The County received notice that it had met eligibility requirements for a federal government grant intended to support the capital project in the amount of $250,000. The grant (cash) will be received when the project is completed in February 2018.

The County issued a contract for the construction in the amount of $1,000,000.

The contractor periodically bills the County for construction completed to date. During the year, bills totaling $680,000 were received. By year-end, a total of $605,000 had been paid.

Jefferson County established a debt service fund to make interest and principal payments on the bonds issued in item 1 above. Bond payments are made on October 1 and April 1 of each year. Interest is based on an annual rate of 4 percent. A principal payment of $27,000 is due in 2017.
The following transactions occurred during 2017:

The bond premium was received by the debt service fund through transfer from the capital project fund.

Page 143September 30, $43,000 was transferred from the General Fund for the October 1 bond payment.

The first debt service payment was made on October 1, 2017.

The Elwood Family Reading Enrichment Fund was established in December 2016, funded by a bequest with the legal restriction that only earnings, and not principal, can be used for the purchase of books for the James K. Polk Library in Jefferson County. The principal amount that must be maintained is $500,000. The following transactions occurred during 2017:

Permanent Fund Trial Balance: December 31, 2016
	Debits	Credits
Receivable from Grantor	$500,000
Nonspendable Fund Balance Library Purchases		$500,000

The Elwood family pledge of $500,000 was received in donated corporate bonds with a fair value of $370,000 and the balance in cash.

$130,000 was invested in U.S. government securities.

Interest in the amount of $15,000 was received in cash during the year.

During the year, books totaling $11,500 were ordered for the library.

During the year, the library reported receiving books with an invoice amount totaling $11,500; $8,600 of the amounts due for book purchases had been paid by year-end.

An additional $890 of interest had accrued on the investments at December 31 and will be received in January of next year.

The corporate bonds had a market value of $373,000 and the U.S. securities had a market value of $129,800 as of December 31.
Required:
Using the Excel template provided (a separate tab is provided for each of the requirements):

Prepare journal entries recording the events 1 to 14 for the capital projects, debt service, and permanent funds.

Post the journal entries to T-accounts.

Prepare closing entries.

Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Governmental Funds (the General Fund financial statements have already been prepared).

Prepare a Balance Sheet for the Governmental Funds, assuming that unexpended spendable resources in the capital projects fund are classified as restricted and unexpended spendable resources in the debt service and permanent funds are classified as assigned.

Answer 1

4-11 - Journal Entries:

S.no	Description	Debit	Credit
1	Estimated Revenues	285,000
	Appropriations		235,000
	Estimated Other Financing Uses		40,000
	Budgetary Fund Balance		10,000
2	Encumbrances (prior year)	4,800
	Unreserved Fund Balance		4,800
3	Deferred Property Taxes	21,000
	Property Tax Revenue		21,000
4	Taxes Receivable	290,000
	Allowance For Uncollectible Taxes		1,450
	Property Tax Revenue		288,550
5	Cash	263,400
	Taxes Receivable		263,400
6	Encumberances	37,100
	Budgetary Fund Balance Reserve For Encumberances		37,100
7	Budgetary Fund Balance Reserve For Encumberances	41,000
	Encumberances (prior year)		4,800
	Encumberances		36,200
	Supplies	37,800
	Accounts Payable		37,800
8	Capital Outlay Expenditures	46,000
	Cash		46,000
9	General Government Expenditures (prior year)	900
	General Government Expenditures	135,000
	Accounts Payable		135,900
	Accounts Payable	135,900
	Cash		135,900
10	General Government Expenditures	7,600
	Accounts Payable		7,600
11	Other Financing Uses Transfers Out	43,000
	Cash		43,000
12	General Government Expenditures	1,050
	Wages Payable		1,050
13	General Government Expenditures	38,810
	Supplies		38,810
14	Property Tax Revenues	22,000
	Deferred Property Tax Revenues		22,000
C	Appropriations	235,000
	Estimated Other Financing Uses	40,000
	Budgetary Fund Balance	10,000
	Estimated Revenues		285,000