Exam 4: An Introduction to General and Special Revenue Funds

A city considers annual revenues from fines to be immaterial. Under the circumstances, the city

General Fund activities are financed primarily through taxes, intergovernmental grants, and borrowing.

When goods that were ordered using a Special Revenue Fund's resources are received, a debit entry should be made to an encumbrances account.

A tax roll for property taxes serves as a:

Governments record revenues for levied property taxes in the General Fund when the property taxes are measurable and available.

The Village of Walton borrowed $500,000 for a period of six months using a tax anticipation note on November 1, 2019. The Village is charged interest on the borrowing at annual rate of 6 percent. The Village's fiscal year-end is September 30, 2020. What journal entry should be made in the Village's General Fund when the Village repays the loan with interest on April 30, 2020? a. Expenditures-notes principal 500,000 Expenditures-interest 30,000 Cash 530,000 b. Expenditures-notes principal 500,000 Expenditures-interest 15,000 Cash 515,000 c. Tax anticipation notes payable 500,000 Expenditures-interest 30,000 Cash 530,000 d. Tax anticipation notes payable 500,000 Expenditures-interest 15,000 Cash 515,000

An expenditure for salaries should be recorded in a General or Special Revenue Fund for the work of employees during the last few days of a fiscal year that is not paid until early in the next fiscal year.

In the General Fund, interest on short-term investments always should be accrued as revenue at a government's fiscal year-end.

Interest on outstanding tax anticipation notes should be accrued in the General Fund at the end of a government's fiscal year.

Prepare journal entries to record the following transactions for Cosmotown for 2020. The town records encumbrances only for its Supplies appropriation. a. Cosmotown adopted the following budget for the year: Revenues Property taxes 275,000 Licenses and fees 35,000 Appropriations Salaries 255,000 Supplies 40,000 Interest 1,500 b. Property tax bills amounting to $275,000 were sent to property owners. c. Because property taxes were not due to be received for several months and the town needed cash to finance its activities. Cosmotown borrowed $100,000 from a local bank, using tax anticipation notes. d. Cosmotown paid salaries in the amount of $75,000. e. The town sent out two purchase orders for supplies: purchase order A for $6,000 and purchase order B for $5,000. f. The town received $130,000 from property owners in payment of property taxes. g. Cosmotown repaid the bank on its borrowing in transaction c. The amount paid was $101,000, which included interest of $1,000. h. The town collected $15,000 for fishing licenses. i. The town received the supplies ordered on purchase order A in transaction e. The supplies arrived in good condition and the invoice for $6,100 was approved for payment. j. The town treasurer paid the invoice in transaction i. for $6,100.

A city had placed a purchase order for $25,000 for street maintenance supplies; the order allowed for price increases up to 5 percent of the order. The vendor shipped the supplies and billed the city for a total of $26,000. The city inspected the shipment and approved the invoice for $26,000. What budgetary journal entry should the city make when the supplies are received?

Prepare journal entries to record the following transactions and events for Tropical Township's General Fund for the year 2020. a. The township adopted a budget calling for appropriations of $360,000. Estimated revenues (all property taxes) were 340,000. b. The township sent property tax bills amounting to $340,000 to property owners. All taxes are expected to be collected during the fiscal year. c. Property owners paid $335,000 of taxes to the township. d. A purchase order of $25,000 was sent to a supplier. e. The supplies ordered in d., above, were received in good order and the accompanying invoice of $24,000 was approved but not yet paid.

Proceeds from tax anticipation notes are recorded as other financing sources in the General Fund.

As provided in the adopted budget, on January 1, 2020 Croton City levies real property taxes of $28 million for General Fund activities, payable in two equal installments, in March and September. The city assumes all taxes will be paid in the fiscal year the taxes were levied. What journal entry should the city make on January 1 in its General Fund?

A city has only one General Fund buy may have many Special Revenue Funds.

The city council passed a budget for its Special Revenue Fund. The budget included estimated revenues of $1,080,000 and appropriations of $1,100,000. The budget was recorded in the general ledger at the beginning of the year and no amendments to the budget occurred during the year. Prepare the journal entry to close the city's budgetary accounts for its Special Revenue Fund at its fiscal year-end.

Winter County enacted a law establishing a Highway Special Revenue Fund, effective January 1, 2020. The fund expenditures were to be financed by a special gasoline tax. Prepare journal entries to record the following transactions for the calendar year 2020. Also, prepare a preclosing trial balance as of December 31,2020. a. Winter County adopted the following budget for the fund: Estimated revenues\_gasoline taxes 855,000 Appropriations-maintenance salaries 745,000 Appropriations-maintenance supplies 90,000 Budgeted increase in fund balance 20,000 b. The county collected gasoline taxes of $825,000. c. The county paid maintenance salaries of $730,000. d. The county placed purchase orders for maintenance supplies totaling $65,000. e. The supplies ordered in d., above, were received and accepted. Because the purchase orders allowed for additional quantities to be shipped, the invoices totaled $68,000. f. Because of the shortfall in gasoline tax collections, the county reduced estimated revenues by $30,000. It also ordered a halt to all purchases of maintenance supplies and reduced the appropriation for maintenance supplies by $20,000. g. Unpaid salaries for the last few days in December (to be paid in January 2021) totaled $14,000.

On April 1, 2019, a county borrows $1,000,000 for its General Fund activities on a tax anticipation note (TAN) that matures on January 31, 2020 with interest of 3 percent per annum. The county operates on a calendar-year basis. What journal entries, if any, should the county make in its General Fund on April 1, 2019 and December 31, 2019?

On January 1, 2019, a city adopted a budget wherein estimated revenues were $30,000 greater than the appropriations. Because of a slowdown in the economy, it became apparent in June that there would be a shortfall of $25,000 in sales tax collections. The city amended its budget to take account of the reduction in estimated sales tax collections. What journal entry should the city make in June?

The actual revenues and expenditures in the budgetary comparison schedule or statement are prepared using the modified accrual basis of accounting.