a. A city adopts the general fund budget. The budget estimates that $2,000,000 i
ID: 2376448 • Letter: A
Question
a. A city adopts the general fund budget. The budget estimates that $2,000,000 in property taxes will be received and authorizes spending for operating activities of $1,900,000 and also anticipates $80,000 will be spent during the year to settle an outstanding lawsuit.
Prepare the journal entry to record the budget.
b. The city completes its fiscal year. The city received property tax revenues of $1,900,000, and the remaining balance will not be received until 90days after the fiscal year-end. The city settled the lawsuitefor $75,000. The city sprnt 41,750,000 during the fiscal year and still has $80,000 in encumbrances outstanding. Prepare the entries to close the budgetry accounts (use the info from a. above as needed).
Explanation / Answer
a. A city adopts the general fund budget. The budget estimates that $2,000,000 in property taxes will be received and authorizes spending for operating activities of $1,900,000 and also anticipates $80,000 will be spent during the year to settle an outstanding lawsuit.
Prepare the journal entry to record the budget.
Estimated Revenues Dr 2,000,000
Appropriations Cr 1900,000
Estimated Other financing Uses Cr 80,000
Budetary Fund Balance Cr 20,000
b. The city completes its fiscal year. The city received property tax revenues of $1,900,000, and the remaining balance will not be received until 90days after the fiscal year-end. The city settled the lawsuitefor $75,000. The city sprnt 41,750,000 during the fiscal year and still has $80,000 in encumbrances outstanding. Prepare the entries to close the budgetry accounts (use the info from a. above as needed).
During year journal entry is as below:
Cash Dr 1900,000
Revenues Cr 1900,000
Estimated Other financing Uses Dr 75,000
Cash Cr 75000
Expenditure Dr 41,750,000
Cash Cr 41,750,000
Encumberance Dr 80,000
Budget Fund balance reservec for Encumberance Cr 80,000
Closing entries :
Revenues DR 1900,000
Budetary Fund Balance Dr 100,000
Estimated Revenues Cr 2,000,000
Estimated Other financing Uses Dr 80,000
Other financing Uses Cr 75,000
Budetary Fund Balance Cr 5000
SO Budetary Fund Balance has a Dr balance of 100,000-5000= 95000.
So CLosing entry for Budetary Fund Balance is
Unresreved fund balance Dr 95,000
Budetary Fund Balance Cr 95,000
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