Question

Exercise 1                                                                                                                                                                                    

Prepare journal entries to record the following transactions for Riyadhtown for 2018. The Town records encumbrances only for its Supplies appropriation.

            a.    Riyadhtownadopted the following budget for the year:

                        Revenues:

                              Property taxes                                                        SAR 375,000

                              Licenses and fees                                                              35,000

                        Appropriations:

Salaries                                                                            255,000

                              Supplies                                                                             40,000

                              Interest                                                                                1,500

            b.   Property tax bills amounting to SAR375,000 were sent to the property owners.

            c.    Because property taxes were not due to be received for several months and the town needed cash to finance its activities, Riyadhtown borrowed SAR 100,000 from a local bank using tax anticipation notes.

            d.   Riyadhtownpaid salaries in the amount of SAR 95,000.

            e.    The town sent out two purchase orders for supplies: purchase order A for SAR6,000 and purchase order B for SAR5,000.

            f.    The town received SAR 130,000 from property owners in payment of their property taxes.

            g.   Riyadhtownrepaid the bank on its borrowing in transaction c. The amount paid was SAR101,000, which included interest of SAR1,000.

            h.   The town collected SAR 25,000 for fishing licenses.

            i.    The town received the supplies ordered on purchase order A in transaction e. All the supplies arrived in good condition and the invoice for SAR 6,300 was approved for payment.

            j.    The town Treasurer paid the invoice in transaction i. for SAR6,300.

Answer:

Exercise 2             

The preclosing trial balance of the General Fund for the City of Dammam shows the following balances at the end of its fiscal year.

            Budgetary fund balance                                                           SAR   20,000

            Fund balance, beginning (actual)                                                      250,000

            Estimated revenues                                                                           630,000

            Appropriations                                                                                  610,000

            Revenues (actual)                                                                              625,000

            Expenditures                                                                                     605,000

Based on information presented above:

1. Prepare closing entries for the budgetary and financial accounts.
2. Calculate the ending fund balance for the city of Dammam. (Show your work.)

Answer 1