How do I turn these journal entries into a Balance Sheet and Statement of Revenu

Question

How do I turn these journal entries into a Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balance Information?

Journal Entries Debit Credit 2. ESTIMATED REVENUES CONTROL        400,000 APPROPRIATIONS CONTROL        350,000 FB- UNASSIGNED          50,000 FB - Assign for Encumb          20,000 FB - Unassigned          20,000 ENCUMB          20,000 BFB - ASSIGN FOR ENCUMB          20,000 3. PTR-C        380,000 Allow Uncoll - C          19,000 Rev- Prop Tax        361,000 4. Cash        365,000 PTR-C        345,000 PTR-D          20,000 Allow Uncoll Tax -D          20,000 PTR-D          20,000 Rev          16,000 PTR-C          16,000 5. OFU-TO to WUEF          60,000 Cash          60,000 6. Expenditures          50,000 Due To Util EF          50,000 7. ENCUMB          31,000 BFB- ASSIGN FOR ENCUMB          31,000 BFB- ASSIGN FOR ENCUMB          31,000 ENCUMB          31,000 Expend          30,000 Cash          30,000 8. Expend            4,000 Cash            4,000 9. ENCUMB            2,000 BFB- ASSIGN FOR ENCUMB            2,000 ENCUMB          10,000 BFB- ASSIGN FOR ENCUMB          10,000 BFB- ASSIGN FOR ENCUMB          10,000 ENCUMB          10,000 Expend            8,000 Cash            8,000 10. BFB- ASSIGN FOR ENCUMB          20,000 ENCUMB          20,000 Expend          18,000 Cash          18,000 11. AP          15,000 Cash          15,000 12. Expend          15,000 Inv Supplies          15,000 14. Expend        150,000 Cash        150,000

Explanation / Answer

Start by applying the following three golden rules of Accounting to create Trial Balance and then create Balance Sheet, Statement of Income & Expenditure and Changes in Fund Balance:

i. Debit What Comes In; Credit What Goes Out [this will impact Balance Sheet as it pertains to incoming and outgoing of physical tangible assets of business; it will also impact Funds Flow statement for entries containing cash inflow and cash outflow]- for Real Accounts

ii. Debit all Expenses and Losses; Credit all Incomes and Gains [this will impact Statement of Income & Expenditure as it pertains to expenses and incomes which are of revenue / current nature i.e. pertaining to current financial year and do not create any tangible physical asset- for Nomoinal Accounts

iii. Debit the Receiver; Credit the Giver; [this will impact Balance Sheet and Funds Flow Statement as it pertains to creation of receivables and payables from various business parties and also pertains to payment of dues by and to these business parties] - for Personal Accounts

You might already be having existing individual ledger accounts for each of the given accounts in your Journal Entries with opening balances and closing balances carried forward from previous accounting year, for posting of Journal Entries pertaining to Real Accounts and Personal Accounts;

For Nominal Acccounts like current year's incomes and expenses, there will be no Opening balance or Closing balance though as they strictly pertain only to relevant current accounting year and their yearly balances are to be directly transferred to credit side and debit side of Statement of Incomes & Expenditures i.e. Profit & Loss Statement

Once the above step is completed, next step is to draw a Trial Balance i.e. comprehensive list of all three types of accounts with their respective closing balances (either debit balance or credit balance) which finally should tally on both sides i.e. Debit Side and Credit Side because of Double-Entry Book-Keeping system of Accounting being followed i.e. every debit has an equal and opposite corresponding credit of the same amount in this system of accounting.

Next step is to draw Balance Sheet out of this Trial Balance which fiunally should tally on both the sides i.e. Assets side and Liabilities Side. Please note that all Nominal Accounts' balances for the accounting year go into Profit and Loss account statement; which finally gets its yearly profit or loss transferred to Balnce Sheet in Accumulated Retained Earnings account on Liabilities side.

Next step is to draw Funds Flow Statement by accounting for changes in account balances of Balance Sheet broad items i.e. main heading items in Balance Sheet, between two year endings i.e. current accounting year ending balances vis-a-vis previous accounting year ending balances. This is done in order to study the Funds Flow in business over a period of one accounting year.. It has two sides: Sources of Funds and Application of Funds, both of which should tally in the end due to Double-Entry sytem of Book-Keeping Accounting..

Nest Step is to prepare Statement of Cash Flows using all cash-related Journal Entries to account for all cash-banking based transactions of business during the year to obtain Net Increase or Net Decrease in Cash Bank Balance, which should reconcile with difference in opening balance and closing balance of Cash/Bank account in Balance Sheet. All non-cash items like depreciation, amortization, etc. and yearly working capital changes need to be adjusted for in this Statement of Cash Flows..

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.