(Journal entries - comprehensive problem) The Town of ...

[ec501234]

(Journal entries - comprehensive problem)
 
  The Town of Elderville accounts for its revenues and day-to-day operating expenditures in its General Fund.
 
  The Town uses encumbrance accounting to keep budgetary control over the appropriation for other expenditures. Prepare journal entries to record these transactions in the General Fund for the calendar year 2013 .
   a. The following budget is adopted at the beginning of the year:
   Estimated revenues:
   Property taxes 315,000
   Sales taxes 85,000
   Appropriations:
   Personal services 250,000
   Supplies 43,000
   Interest expenditures 3,000
   Other financing uses 85,000
   b. To raise the required 315,000 in property taxes, property owners are billed for a total of 317,000 . This will allow 2,000 for estimated uncollectible property taxes and refunds.
   c. To provide cash at the start of the year, the Town borrows 100,000 on a tax anticipation note. The note will be repaid in six months with interest at 4 per annum.
   d. The Town sends a purchase order for 4,000 to a vendor for supplies.
   e. The General Fund pays 85,000 to the Debt Service Fund (DSF) to enable the DSF to pay interest and principal on Town debt.
   f. The vendor in d., above, delivers the supplies ordered by the Town, and bills the Town for 4,200 . The Town accepts delivery and prepares a voucher for the full amount of the bill.
   g. Property owners pay property taxes in the amount of 300,000
   h. The Town repays the 100,000 borrowed in c., above, together with interest for six months.
   i. The voucher in f., above, is paid.
 
   j. The Town receives 80,000 for sales taxes collected by the state on behalf of the Town.
   k. S. Sparrow, a long-time resident, is unable to pay his 3,000 property tax bill in full. He pays 1,000, and the Town writes off the remaining 2,000 as uncollectible.
   l. The Town declares all remaining unpaid property taxes to be delinquent. It also notifies delinquent property owners that they owe penalties of 2,000 on the delinquent taxes.
   m. The Town Council approves a budgetary interchange of 5,000 from the supplies appropriation to the personal services appropriation to meet unforeseen overtime costs.
   n. The General Fund receives a bill from the Water Utility Fund for 6,000 (Note: Charge this to supplies expenditures. No encumbrance is necessary.)
   o. The Town pays personal services in the amount of 253,000
   p. The Town is notified by the state that it collected an additional 3,000 in December 2013 sales taxes that it will remit to the Town on January 20, 2014
   q. The Town files a tax lien against one of the delinquent taxpayers (in l. above). The taxpayer is past due on 4,000 of property taxes and owes penalties and interest of 400 on delinquent taxes.
   r. The city sold the property (in q.) at auction for 6,000 . The auctioneer charged 300 for his services, which has not yet been paid.

Question 2

On a systems flowchart, computer processing is represented by a:
 a. Square
  b. Trapezoid
  c. Rectangle
  d. Parallelogram

[choc0chan]

Answer to Question 1

a. Estimated revenues - property taxes 315,000
Estimated revenues - sales taxes 85,000
Appropriations - personal services 250,000
Appropriations - supplies 43,000
Appropriations - interest expenditures 3,000
Appropriations - other financing uses 85,000
Budgetary fund balance 19,000

b. Property taxes receivable 317,000
Allowance for refunds and uncollectible taxes 2,000
Revenues - property taxes 315,000

c. Cash 100,000
Tax anticipation notes payable 100,000

d. Encumbrances - supplies 4,000
Budgetary fund balance reserved for encumbrances 4,000

e. Transfer out to Debt Service Fund 85,000
Cash 85,000
f. Budgetary fund balance reserved for encumbrances 4,000
Encumbrances - supplies 4,000

Expenditures - supplies 4,200
Vouchers payable 4,200

g. Cash 300,000
Property taxes receivable 300,000

h. Tax anticipation notes payable 100,000
Expenditures - interest 2,000
Cash 102,000

i. Vouchers payable 4,200
Cash 4,200

j. Cash 80,000
Revenues - sales taxes 80,000

k. Cash 1,000
Allowance for uncollectible property taxes 2,000
Property taxes receivable 3,000

l. Property taxes receivable - delinquent 14,000
Property taxes receivable 14,000

Interest and penalties receivable 2,000
Revenues - penalties and interest 2,000

m. Appropriations - supplies 5,000
Appropriations - personal services 5,000

n. Expenditures - supplies 6,000
Due to Water Utility Fund 6,000

o. Expenditures - personal services 253,000
Cash 253,000

p. Sales taxes receivable 3,000
Revenues - sales taxes 3,000

q. Tax liens receivable 4,400
Property taxes receivable  delinquent 4,000
Interest and penalties receivable 400

r. Cash 6,000
Tax liens receivable 4,400
Vouchers payable 1,600

Answer to Question 2

C