Solution manual advanced accounting 4e jeter ch17

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CHAPTER 17
ANSWERS TO QUESTIONS
1. The performance of services by nonbusiness organizations is based on social need rather than on
the profit motive and there is no conscious or deliberate effort by such organizations to derive a
profit from their operations.
Nonbusiness organizations are not operated for the financial benefit of a specific individual or
group of individuals and those who contribute resources to nonbusiness organizations do not
necessarily benefit proportionately or at all from the services provided by such organizations.
There is no proprietary interest in nonbusiness organizations and the equity interest in the net assets
of such organizations cannot be sold or exchanged.
2. A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and
other financial resources together with all related liabilities and residual equities or balances, and
changes therein, which are segregated for the purpose of carrying on specific activities or attaining
certain objectives in accordance with special regulations, restrictions, or limitations.
3. At any particular point in time the unreserved fund balance of an expendable fund entity represents
the balance of financial resources that are available for expenditure for the specified purposes or
objectives for which the fund was created.
4. Major classifications of increases in expendable fund resources are revenues, debt issue proceeds
and transfers from other funds. Decreases in expendable fund resources are classified as
expenditures or as transfers to other funds.
5. In accounting for expendable funds entities revenue is recognized when (1) it can be objectively
measured and (2) it is available to finance expenditures of the current period. In contrast, in
accounting for profit-oriented enterprises revenue is ordinarily not recognized until (1) it can be
objectively measured and (2) the earnings process is complete or substantially complete.
6. Municipality:
Functions – Public Safety
Activity – Vice Control
Organization Unit – Police Department
Object – Travel

Functional and activity classifications are recommended for external financial reporting.
7. An appropriation is an authorization enacted by a legislative body or granted by a governing board
to make expenditures for a specified purpose.
An encumbrance is an obligation in the form of a purchase order or other commitment that reduces
appropriation authority and is formally recorded in the accounting records.

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An expenditure is a decrease in the net financial resources of a fund entity incurred to carry out the
activities or objectives of the fund.
A disbursement represents the payment of cash for an expenditure. Such payments may precede the
expenditure (an advance), coincide with the expenditure (a direct payment), or follow the
expenditure (the payment of a liability).
8. An expense is associated with accounting for profit oriented enterprises or proprietary funds and
may be defined as an expired cost consumed in the production of revenue. An expenditure is
associated with accounting for expendable funds entities and is a decrease in the net financial
resources of a fund entity incurred to carry out the activities or objectives of the fund.
9. In accounting for commercial activities, estimated uncollectible receivables are treated as an
expense in the determination of net income. In accounting for expendable fund entities, estimated
uncollectible taxes are treated as a direct reduction of revenue in the determination of the inflow of
financial resources. The estimate of uncollectible taxes is treated as a direct reduction of revenue
rather than as an expenditure since the failure to collect taxes is not an outflow of financial
resources but rather is a reduction in the inflow of financial resources. Since there is no
appropriation for the amount of estimated uncollectible taxes, it is properly accounted for as a
reduction of revenue rather than as an expenditure.
10. Since the amount of an appropriation cannot be legally exceeded, the placing of purchase orders
and the signing of contracts are critical events in controlling the expenditures of expendable fund

entities. The financial resources of a fund are said to be encumbered when a transaction is entered
into that requires performance on the part of another party before the nonprofit entity becomes
liable to perform (expend financial resources) its part of the transaction. Encumbrance accounting
formally records the reduction of appropriation authority resulting from purchase orders and similar
commitments and thus serves to provide an accounting safeguard against the expenditure of
financial resources in excess of appropriations.
There would be no reason to prevent a commercial enterprise from using encumbrance accounting
so long as the balance in reserve for encumbrances was offset by the balance in the encumbrances
account for reporting purposes. However, the compelling need for encumbrance accounting arising
from the penalties provided by law for government administrators who expend funds in excess of
those appropriated is not a factor in the operation and administration of commercial enterprises.
11. The balance in the Reserve for Encumbrances account is not a liability. Rather it represents the
estimated amount of net financial resources of the fund entity that will be needed in the subsequent
year to liquidate obligations entered into under the authority of the current year’s appropriation. As
such it represents a restriction on the availability of fund resources for future appropriation rather
than a liability and is properly reported in the financial statements as a portion (reserved) of the
total fund balance.
12. There should be columns for the following balances: Appropriations, Encumbrances, Expenditures,
Total Encumbrances and Expenditures, and Unencumbered Balance.
13. Assets acquired with the resources of an expendable fund entity do not represent expendable
financial resources but rather reflect the purposes for which the financial resources have been used.
Thus, they are recorded and reported as expenditures of, rather than as assets of, the expendable
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fund entity. Depreciation is not accounted for in the records of an expendable fund entity for the
same reasons that fixed assets are excluded from the records of such entities. Expenditures, not
expenses, are measured in fund accounting.

Acquisitions of fixed assets require the use of financial resources and are accounted for as
expenditures. Depreciation of such assets is not a use of the financial resources of an expendable
fund entity and thus is not properly recorded in the accounts of such entities. Inclusion of
depreciation expense in the operating statement of an expendable fund entity would confuse two
fundamentally different measurements - expenditures and expenses.
14. The adoption of a budget for a general fund is a legislative process that is highly formalized and
which results in the formal recording of the budgeted amounts (appropriations) within the
framework of the double entry accounting system. The adoption of a budget by a commercial unit
is also a planning and control device, but the adoption process and the subsequent application of the
budget is seldom as formalized or as rigid as it is in governmental accounting.
15. There are two principal financial statements recommended for expendable fund entities: (1) a
Comparative Balance Sheet and (2) a Comparative Statement of Revenue, Expenditures and Other
Changes in Fund Balance. These two statements may be accompanied by schedules that present
detailed financial data which support and amplify the information summarized in the formal
financial statements. Supporting schedules may also be used to present budgetary data or to
demonstrate compliance with legal provisions.
16. In order to determine the total cost of performing a particular function or activity, the total
expenditures for such functions or activities would have to be adjusted by reducing the amount of
capital expenditures included therein and by adding depreciation expenses relating to the
dissipation of services embodied in capital assets utilized to support the function or activity. Since
capital acquisitions are not distinguished from other expenditures in the records of expendable fund
entities and since depreciation is not calculated within the framework of the records of expendable
fund entities there may be no reasonable basis for determining the amount or classification of these
adjustments.
Business Ethics
Business ethics solutions are merely suggestions of points to address. The objective is to raise the
students' awareness of the topics, and to invite discussion. In most cases, there is clear room for
disagreement or conflicting viewpoints.
Issues to be considered: If pricing is a function of cost, then businesses charging excessive prices can
be viewed as following excessive, even obscene pricing strategies. Also, there are others visiting the

city who are not attending the football game and who might adversely affected (for example,
individuals with medical emergencies, ill family members, etc.). On the other hand, the goal of
business is to make a profit and take advantage of market opportunities. As long as people are aware of
the practices, many might argue that the pricing strategy is appropriate.
Answers to Analyzing Financial Statements
AFS 17-1
1. Assets and liabilities are not classified by current and non-current, because government funds present
current financial resources. In addition, the typical for-profit balance sheet equation is assets equal
liabilities plus equity. In the non-profit statement, Assets equal liabilities plus fund balances.
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2. The largest asset is Investments. This may seem surprising, but in the general fund capital assets are
not recorded.
3. The reserve for encumbrances represents the portion of the funds set aside to pay for goods not yet
received and services not yet contracted for prior to year-end.
AFS 17-2
1. The statement of Revenues, Expenditures, and Changes in Fund Balances focuses on the inflows and
outflows of current financial resources and come into and leave from the government. When a capital
asset is purchased, the entire cost is recognized in the government’s fund (whereas on a for-profit
statement the cost is capitalized and depreciation over its useful life). Similarly, when a government
repays debt, both the interest and principal payments are reflected on the statement. On a for-profit
income statement, only interest is recognized as an expense.
2. The largest expenditure in the general fund is for police.
3. The largest source of revenue is from property taxes.
4. When the general fund revenues, expenditures, and other financing sources are added together, the
general fund increased by $39,777. Of this amount, $10,851 was transferred in from other parts of the
government.

ANSWERS TO EXERCISES
Exercise 17-1
1.

Cash

15,000
Revenue

2.

15,000

Cash

100,000
Revenue

3.

4.

100,000

Encumbrances
Reserve for Encumbrances

130,000

Cash

500,000

130,000

Bond Issue Proceeds

500,000

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Exercise 17–1 (continued)
5.

Cash

250,000
Revenue

6.

250,000

Expenditures
Vouchers Payable

140,000

Reserve for Encumbrances
Encumbrances

130,000

140,000

130,000

Exercise 17–2
1.

2.

3.

4.

5.

6.

7.

Estimated Revenues
Appropriations
Unreserved Fund Balance

4,000,000

Property Tax Receivable
Estimated Uncollectible Property Tax
Revenue

3,000,000

3,800,000
200,000

120,000
2,880,000

Due From State
Revenue

500,000

Encumbrances
Reserve for Encumbrances

250,000

Expenditures
Vouchers Payable

250,000

Reserve for Encumbrances
Encumbrances

250,000

Vouchers Payable
Cash

250,000

500,000

250,000

250,000

250,000

250,000

Expenditures
Cash

36,000
36,000

Cash

2,050,000
Property Tax Receivable

2,050,000

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Exercise 17–3
1.

2.

3.

Estimated Revenues
Appropriations
Unreserved Fund Balance

1,950,000

Property Tax Receivable
Estimated Uncollectible Property Tax
Revenue

1,150,000

Cash

1,080,000

1,800,000

150,000

35,000
1,115,000

Property Tax Receivable
4.

1,080,000

Expenditures
Cash

200,000
200,000

Cash

24,000
Revenue

5.

6.

7.

24,000

Encumbrances

Reserve for Encumbrances

96,000
96,000

Expenditures
Contracts Payable

8,000

Reserve for Encumbrances
Encumbrances

8,000

Contracts Payable
Cash

8,000

8,000

8,000

8,000

17 - 6


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Exercise 17–4
1.

2.

3.

4.

Revenue
Estimated Revenue
Unreserved Fund Balance

3,210,000

Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

2,700,000

3,110,000
100,000

1,960,000
734,000
6,000

Reserve for Encumbrances – 2008
Unreserved Fund Balance
Expenditures – 2008

50,000
5,000

Transfers From Other Funds
Unreserved Fund Balance
Transfers to Other Funds

40,000
50,000

55,000

90,000

Exercise 17–5
1.

2.

3.

Revenue
Unreserved Fund Balance
Estimated Revenue

1,675,000

15,000

Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

1,550,000

1,690,000

1,310,000
165,000
75,000

Reserve for Encumbrances – 2007
Expenditures – 2007
Unreserved Fund Balance

35,000
32,000
3,000

Exercise 17–6
Part A Inventory
Reserve for Supplies Inventory
Part B

65,000
65,000

$350,000

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Exercise 17–7
Part A Expenditures
Cash

225,000
225,000

Inventory
Reserve for Supplies Inventory
Part B

5,000
5,000

Expenditures
Cash

225,000
225,000

Inventory
Expenditures

5,000

Unreserved Fund Balance
Reserve for Supplies Inventory

5,000

5,000

5,000

Part C Unreserved Fund Balance
1/1/ Balance
Purchase of Supplies
Use of Supplies
Setting up of Reserve
12/31/ Balance

Purchases

Consumption

$555,000
(225,000)

$555,000

________
$330,000

(220,000)
(5,000)
$330,000

Exercise 17–8
1.

2.

3.
4.
5.

Estimated Revenue
Appropriations
Unreserved Fund Balance

1,900,000
1,850,000
50,000

Property Tax Receivable
Estimated Uncollectible Property Taxes (5%)
Revenue

955,000
47,750
907,250

Encumbrances
Reserve for Encumbrances

16,400

Encumbrances
Reserve for Encumbrances

140,000

16,400
140,000

Expenditures
Cash

90,000
90,000

17 - 8


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Exercise 17–8 (continued)
6.
Due from State
Revenue
7.

8.

9.

375,000
375,000

Expenditures
Vouchers Payable

135,000

Reserve for Encumbrances
Encumbrances

137,000

135,000
137,000

Expenditures
Vouchers Payable

16,200

Reserve for Encumbrances
Encumbrances

16,400

16,200
16,400

Cash

450,000
Property Tax Receivable

10.
11.

450,000

Vouchers Payable ($135,000 + $16,200)
Cash
Reserve for Encumbrances
Encumbrances

151,200
151,200
650
650

Exercise 17–9
1.

2.

3.

4.

Estimated Revenue
Unreserved Fund Balance
Appropriations
To record the approved operating budget.

565,000
15,000

Property Tax Receivable ($60,000,000/$100)
Estimated Uncollectible Taxes (3%)
Revenue
To record tax levy

600,000

580,000

18,000
582,000

Encumbrances
Reserve for Encumbrances
To record purchase order for motorcycle

4,200

Expenditures ($4,200 + $425)
Vouchers Payable

4,625

Reserve for Encumbrances
Encumbrances
To record liability for motorcycle received and to remove
the encumbrance

4,200

4,200

4,625

17 - 9

4,200


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Exercise 17–9 (continued)
5.
Expenditures
Cash
To record payment of payroll (an unencumbered
expenditure).
6.

Cash

20,000
20,000

8,225

Revenue
To record receipt of proceeds from sale of equipment
7.

Cash

8,225

540,000

Property Tax Receivable
To record property tax receipts

540,000

Exercise 17–10
1. d 2. a 3. d 4. b 5. d 6. c 7. c

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ANSWERS TO PROBLEMS

Problem 17–1
Part A 1.

2.

3.
4.
5.
6.

7.

Estimated Revenue
Appropriations
Unreserved Fund Balance

1,560,000

Due from Water Fund
Transfer from Water Fund

50,000

Transfer to Debt Service Fund
Due to Debt Service Fund

80,000

1,400,000
160,000

50,000
80,000

Property Tax Receivable ($11,000,000 .10)
Revenue
Allowance for Uncollectible Taxes (2%)

1,100,000

Encumbrances
Reserve for Encumbrances

1,150,000

1,078,000
22,000
1,150,000

Expenditures – 2007
Vouchers Payable

29,000

Due to Debt Service Fund
Cash

80,000

29,000
80,000

Expenditures
Vouchers Payable

1,155,000

Reserve for Encumbrances
Encumbrances

1,150,000

1,155,000
1,150,000

Cash

50,000
Due from Water Fund

8.

50,000

Cash

1,050,000
Property Tax Receivable

9.

1,050,000

Allowance for Uncollectible Taxes
Property Tax Receivable

10. Vouchers Payable ($29,000 + $1,155,000)
Cash
11. Cash

17,000
17,000
1,184,000
1,184,000
455,000

Revenue

455,000

12. Encumbrances (2 x $120,000)
Reserve for Encumbrances

17 - 11

240,000
240,000


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Problem 17-1 (continued)
Part B

CITY OF BEDFORD
General Fund
Preclosing Trial Balance
December 31, 2008
Debit
$391,000
108,000
240,000
1,560,000
80,000
29,000
1,155,000

Cash
Property Tax Receivable
Encumbrances
Estimated Revenue
Transfer to Debt Service Fund
Expenditures – 2007
Expenditures
Allowance for Uncollectible Taxes
Unreserved Fund Balance
Reserve for Encumbrances – 2007
Reserve for Encumbrances
Revenue
Appropriations
Transfer from Water Fund

Total

_________
$3,563,000

Credit

$40,000
270,000
30,000
240,000
1,533,000
1,400,000
50,000
$3,563,000

Part C Closing Entries
1.

2.

3.

4.

Revenue
Unreserved Fund Balance
Estimated Revenue

1,533,000

27,000

Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

1,400,000

1,560,000
1,155,000
240,000
5,000

Transfer from Water Fund
Unreserved Fund Balance
Transfer to Debt Service Fund

50,000
30,000

Reserve for Encumbrances - 2007
Expenditures - 2007
Unreserved Fund Balance

30,000

17 - 12

80,000

29,000
1,000


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Problem 17-1 (continued)
Part D

CITY OF BEDFORD
General Fund
Postclosing Trial Balance
December 31, 2008
Cash
Property Tax Receivable
Allowance for Uncollectible Taxes
Unreserved Fund Balance ($270,000 - $27,000 + $5,000 - $30,000 + $1,000)
Reserve for Encumbrances
Total

Debit
$ 391,000
108,000
________
$ 499,000

Credit
$ 40,000
219,000
240,000

$ 499,000

Problem 17–2
Part A Unreserved Fund Balance per Trial Balance
Add Appropriations
Deduct Estimated Revenue
Unreserved Fund Balance on December 31, 2008

$24,000
672,000
(630,000)
$66,000

Unreserved Fund Balance on December 31, 2008 (above)
Reserve for Encumbrances - December 31, 2008
Reserve for Supplies Inventory
Total Fund Balance - 12/31/2008

$66,000
42,000
72,000
$180,000

Part B Adjusting and Closing Entries
Revenue
Estimated Revenue
Unreserved Fund Balance

696,000
630,000

66,000

Reserve for Supplies Inventory ($72,000 - $60,000)
Supplies Inventory

12,000

Unreserved Fund Balance
Reserve for Encumbrances
Expenditures - 2008

1,000
42,000

12,000

43,000

Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

672,000
468,000
120,000
84,000

Part C Unreserved Fund Balance per Trial Balance
Closing Entries ($66,000 - $1,000 + $84,000)

Unreserved Fund Balance 12/31/2009
Reserve for Encumbrances
Reserve for Supplies Inventory
Fund Balance - 12/31/2009

17 - 13

$ 24,000
149,000
173,000
120,000
60,000
$353,000


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Problem 17–3
Part A
Closing Entries
1. Unreserved Fund Balance
Revenue
Estimated Revenue

64,000
3,656,000
3,720,000

2. Reserve for Encumbrances - 2008
Expenditures - 2008

Unreserved Fund Balance

310,000
296,000
14,000

3. Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

3,488,000
3,020,000
382,000
86,000

4. Transfers from Other Funds
Unreserved Fund Balance
Transfers to Other Funds
Part B

300,000
220,000
520,000

Budget entry on January 1, 2009
Estimated Revenues
Appropriations
Unreserved Fund Balance

Part C

3,720,000
3,488,000
232,000

Unreserved fund balance per 12/31/2009 preclosing trial balance
Less credit to unreserved fund balance on 1/1/2009 from budget entry
Unreserved fund balance on 12/31/2008
Reserve for encumbrances 12/31/2008
Total fund balance per balance sheet 12/31/2008

$ 422,000
232,000
190,000
310,000
$ 500,000

Unreserved fund balance per 12/31/2009 pre-closing trial balance
Closing entries ($14,000 + $86,000 - $64,000 - $220,000)
Unreserved fund balance 12/31/2009
Reserve for encumbrances 12/31/2009
Total fund balance per balance sheet 12/31/2009

$422,000
(184,000)
238,000
382,000
$ 620,000

Total fund balance 12/31/2008
Add inflows of financial resources
Revenues
Transfers from other funds

$ 500,000
$3,656,000
300,000

Deduct outflows of financial resources
Expenditures made this year against prior year’s
appropriation authority
Expenditures made this year against current year’s
appropriation authority
Transfers to other funds
Total fund balance 12/31/2009

17 - 14

3,956,000

$296,000
3,020,000
520,000

(3,836,000)
$ 620,000


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Problem 17–4
Part A

Journal Entries
1. Estimated Revenue
Appropriations
Unreserved Fund Balance

1,600,000
1,530,000
70,000

Due from Trust Fund
Transfers from Other Funds

50,000

Transfers to Other Funds
Due to Debt Service Fund

80,000

50,000

80,000

2. Property Tax Receivable
Estimated Uncollectible Taxes
Revenue

1,500,000

3. Encumbrances
Reserve for Encumbrances

1,400,000

4. Cash

1,450,000

30,000
1,470,000

1,400,000

Property Tax Receivable

1,450,000

5. Cash

50,000
Due from Trust Fund

50,000

6. Expenditures
Vouchers Payable

1,380,000
1,380,000

Reserve for Encumbrances
Encumbrances

1,360,000
1,360,000

7. Cash

48,000
Revenue

48,000

8. Vouchers Payable
Cash

1,300,000
1,300,000

9. Due to Debt Service Fund
Cash

80,000
80,000

10. Supplies Inventory

Reserve for Supplies Inventory
($100,000 - $75,000 = $25,000)

17 - 15

25,000
25,000


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Problem 17-4 (continued)
Part B

CITY OF MONTE VISTA
The General Fund
Preclosing Trial Balance
December 31, 2009
Debits
$468,000
50,000

Cash
Property Tax Receivable
Estimated Uncollectible Taxes
Supplies Inventory
Unreserved Fund Balance
Reserve for Supplies Inventory
Estimated Revenue
Appropriations

Transfers from Other Funds
Transfers to Other Funds
Revenue
Encumbrances
Reserve for Encumbrances
Expenditures
Vouchers Payable
Total

Credits

1,518,000
100,000
$370,000
100,000
1,600,000
1,530,000
50,000
80,000
30,000
40,000
40,000
1,380,000
_________
$3,718,000

Part C Closing Entries
1. Revenue
Unreserved Fund Balance
Estimated Revenue

1,518,000
82,000

2. Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

1,530,000

1,600,000

1,380,000
40,000
110,000

3. Transfers From Other Funds
Unreserved Fund Balance
Transfers to Other Funds

50,000
30,000
80,000

17 - 16

80,000
$3,718,000

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Problem 17-4 (continued)
Part D Financial Statements
CITY OF MONTE VISTA
The General Fund
Balance Sheet
December 31, 2009
Assets
Cash
Supplies Inventory
Property Tax Receivable
Less Estimated Uncollectible Taxes
Total

$468,000
100,000
$50,000
30,000

Liabilities and Fund Balance
Vouchers Payable
Fund Balance:
Unreserved ($370,000 - $82,000 + $110,000 - $30,000)
Reserve for Encumbrances
Reserve for Supplies Inventory
Total

80,000

$368,000
40,000
100,000

CITY OF MONTE VISTA
The General Fund
Statement of Revenue, Expenditures and Changes in Fund Balance
For the Year Ended December 31, 2009
Revenue
Expenditures
Revenues over expenditures

$1,518,000
1,380,000
138,000

Other Financing Sources (uses)
Transfers From Other Funds
Transfers to Other Funds

50,000
(80,000)

Increase in Supplies Inventory
Increase in Fund Balance

(30,000)
25,000
133,000

Fund Balance 1/1/ ($300,000 + $75,000)
Fund Balance 12/31

375,000
$ 508,000

17 - 17

20,000
$588,000

508,000
$588,000


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Problem 17–5
Part A

Journal Entries
1. Estimated Revenue
Appropriations
Unreserved Fund Balance

735,000

2. Property Tax Receivable
Estimated Uncollectible Taxes
Revenue

590,000

700,000
35,000

3. Cash

24,000
566,000
35,000

Revenue

35,000

4. Cash

110,000
Revenue

110,000

5. Encumbrances
Reserve for Encumbrances

642,500

6. Expenditures
Vouchers Payable

455,000

642,500

455,000

Reserve for Encumbrances
Encumbrances

470,000
470,000

7. Expenditures - 2008
Vouchers Payable

28,000
28,000

8. Cash

570,000
Property Tax Receivable

570,000

9. Vouchers Payable
Cash

475,000

475,000

10. Cash

50,000
Due from Trust Fund

50,000

11. Estimated Uncollectible Taxes
Property Tax Receivable

30,000
30,000

17 - 18


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Problem 17-5 (continued)
Part B

CITY OF FAIRFIELD
The General Fund
Preclosing Trial Balance
December 31, 2009
Debits
$720,000
35,000

Cash
Property Tax Receivable
Estimated Uncollectible Taxes
Vouchers Payable
Reserve for Encumbrances – 2008
Unreserve Fund Balance
Estimated Revenue
Appropriations
Revenue
Encumbrances
Reserve for Encumbrances
Expenditures
Expenditures - 2008
Total

Credits
$14,000
68,000
30,000
450,000

735,000
700,000
711,000
172,500
172,500
455,000
28,000
__

$2,145,500 $2,145,500

Part C Closing Entries
1. Revenue
Unreserved Fund Balance
Estimated Revenue

711,000
24,000
735,000

2. Reserve for Encumbrances - 2008
Expenditures - 2008
Unreserved Fund Balance

30,000

3. Appropriations
Expenditures
Encumbrances
Unreserved Fund Balance

700,000

28,000
2,000
455,000
172,500
72,500

17 - 19


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Problem 17-5 (continued)
Part D

CITY OF FAIRFIELD
The General Fund
Balance Sheet
December 31, 2009
Assets
Cash
Property Tax Receivable
Less Estimated Uncollectible Taxes

$720,000
$35,000
14,000

Liabilities and Fund Balance
Vouchers Payable
Fund Balance
Unreserved ($450,000 - $24,000 + $2,000 + $72,500)
Reserve for Encumbrances
Total

21,000
$741,000

$68,000

$500,500
172,500

673,000
$741,000

CITY OF FAIRFIELD
The General Fund
Statement of Revenue, Expenditures and Changes in Fund Balance
For the Year Ended December 31, 2009
Revenue
Expenditures ($455,000 + $28,000)
Excess of Revenue over Expenditures
Fund Balance - January 1 ($415,000 + $30,000)
Fund Balance - December 31

17 - 20

$711,000
483,000
228,000
445,000
$673,000


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Problem 17-6

Part A

HUNNINGTON TOWNSHIP
Statement of Revenues, Expenditures and
Changes in Fund Balance
For the Year Ended June 30, 2009
Revenue
Expenditures:
Current Year’s Appropriation
Prior Year’s Appropriation
Total
Excess of Revenues over Expenditures

$760,000a

Sale of Equipment
Increase (Decrease) in Fund Balance
Fund Balance July 1, 2008
Fund Balance June 30, 2009

7,000
12,000
144,000c
$156,000d

712,500b
42,500
755,000
5,000

a

$700,000 + $60,000 = $767,000
$755,000 - $42,500 = $712,500
c
Unreserved fund balance per trial balance
Add appropriations
Deduct estimated revenue (note 3)
Unreserved fund balance - July 1, 2008
Reserve for encumbrances - July 1, 2008
Fund Balance - July 1, 2008
b

d

Unreserved fund balance per trial balance
Add revenue in excess of estimated revenue ($767,000 - $700,000)
Deduct expenditures and encumbrances in excess of appropriations
[($755,000 + $37,000) - $764,000]
Unreserved fund balance - June 30, 2009
Reserve for encumbrances
Fund Balance - June 30, 2009

17 - 21

$80,000
720,000
(700,000)
100,000
44,000

$144,000
$80,000
67,000
(28,000)
119,000
37,000
$156,000


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Problem 17-6 (continued)
Part B

HUNNINGTON TOWNSHIP
The General Fund
Balance Sheet
June 30, 2009
Assets
Cash
Property Tax Receivable
Less Estimated Uncollectible Taxes
Accounts Receivable
Less Allowance for Uncollectible Accounts
Due from Internal Service Fund
Total
Liabilities and Fund Balance
Vouchers Payable
Due to Enterprise Fund
Fund Balance:

Unreserved
Reserve for Encumbrances
Total

$11,000
$107,000
18,000
40,000
4,000

89,000
36,000
50,000
$186,000
$20,000
10,000

$119,000
37,000

17 - 22

156,000
$186,000


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Problem 17-7
Part A Omitted

Part B
1A.

1B.
1C.
2.
3A.
3B.

4.
5.

General Journal Entries
Estimated Revenue
Appropriations
Unreserved Fund Balance

2,268,000
2,225,000
43,000

Due from Water and Sewer Fund
Transfers From Other Funds

118,000
118,000

Transfers to Other Funds
Due to Debt Service Fund

55,000
55,000

Encumbrances
Reserve for Encumbrances

1,202,000

Reserve for Encumbrances
Encumbrances

1,202,000

Expenditures - 2007
Expenditures
Vouchers Payable

80,000
1,085,600

1,202,000
1,202,000

1,165,600

Encumbrances
Reserve for Encumbrances

78,000

Cash

92,500

78,000

Revenue
6.

7.

92,500

Property Tax Receivable ($18,500,000 8%)
Revenue
Allowance for Uncollectible Taxes (2%)
Cash

1,480,000
1,450,400
29,600
58,000

Due from Federal Government
8.
9.
10.

11.

58,000

Due to Debt Service Fund
Cash

55,000
55,000

Accounts Receivable
Revenue

155,675
155,675

Cash
Allowance for Uncollectible Taxes
Property Tax Receivable

1,438,455
18,250
1,456,705

Expenditures
Cash

998,765
998,765

17 - 23

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Problem 17-7 (continued)
12.

Cash

333,650
Revenue

13.

333,650

Cash

495,402
Revenue ($98,682 + $130,000)
Accounts Receivable
Due from Water and Sewer Fund

228,682
148,720
118,000

14A. Expenditures
Voucher Payable

57,680

14B. Vouchers Payable
Cash

57,680

15A. Reserve for Encumbrances
Encumbrances

78,000

15B. Expenditures
Vouchers Payable

79,280

15C. Vouchers Payable
Cash

79,280

16.

57,680
57,680
78,000
79,280
79,280

Vouchers Payable

Cash

1,207,100
1,207,100

17 - 24


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Problem 17-7 (continued)
Part C

CITY OF ROSENBURG
The General Fund
Preclosing Trial Balance1
December 31, 2008
Cash
Certificates of Deposit
Accounts Receivable
Supplies Inventory
Estimated Revenue
Property Taxes Receivable
Allowance for Uncollectible Taxes
Appropriations
Vouchers Payable
Transfer from Water and Sewer Fund
Transfer to Debt Service Fund
Unreserved Fund Balance
Reserve for Inventory

Reserve for Encumbrances - 2007
Expenditures
Revenues
Encumbrances
Expenditures - 2007
Reserve for Encumbrances
1

Part D

Debit
$175,632
200,000
35,630
37,600
2,268,000
98,895

Credit

$43,500
2,225,000
139,500
118,000
55,000
269,075
37,600
78,500
2,221,325
2,260,907

0
80,000
_________
0
$5,172,082 $5,172,082

Before adjustment for inventory and accrued interest on certificates of deposit.

Adjusting Entries
17a. Certificates of Deposit ($200,000)(.05)
Revenues
17b. Inventory
Reserve for Inventory ($38,250 - $37,600)

17 - 25

10,000
10,000
650
650