City of smithville project answers

Chapter 4 Recording Operating Transactions Affecting the General Fund and Governmental Activities at the Government-wide Level

Presented below are a number of transactions for the City of Smithville that occurred during the fiscal year for which the budget given in Chapter 3 was recorded, the calendar year 2014. Read all instructions carefully.

a. After opening the data file containing your data from Chapters 2 and 3 of this project, record the following transactions in the general journal for the General Fund and, if applicable, in the general journal for governmental activities at the government-wide level. For all entries, the date selected should be year 2014. For each of the paragraphs that requires entries in both the General Fund and governmental activities journals, you can either record them in both journals on a paragraph-by-paragraph basis or, alternatively, record all the General Fund journal entries first for all paragraphs, then complete the governmental activities journal entries for all paragraphs next. If you choose the latter method, it might be useful to print the General Fund general journal entries from the Reports menu to assist in making the entries in the governmental activities journal. Regardless of the method you choose, we recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck, Lowensohn, and Wilson textbook (16h edition) for guidance in making all entries.

For each entry affecting budgetary accounts or operating statement accounts, the Detail Journal will automatically open, as was the case in Chapter 3, to record the appropriate amounts in the detail budgetary or actual accounts.

Please remember that before closing the City of Smithville, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved.

1. [Para. 4-a-1] On January 2, 2014, real property taxes were levied for the year in the amount of $1,697,000. It was estimated that 3 percent of the levy would be uncollectible.

Required: Record this transaction in both the General Fund and governmental activities journal. (Note: Type 4-a-1 as the paragraph number in the [Transaction Description] box for this entry; 4-a-2 for the next transaction, etc. Careful referencing by paragraph number is very helpful should you need to determine where you may have omitted a required journal entry or made an error.) (Select “Accrued Revenue” in the drop down [Transaction Description] menu in the Detail Journal related to the General Fund entry.)

2. [Para. 4-a-2] Encumbrances were recorded in the following amounts for purchase orders issued against the appropriations indicated:

General Government $ 98,453

Public Safety 185,259

Public Works 247,675

Health and Welfare 173,469

Culture and Recreation 108,927

Miscellaneous 41,563

Total $855,346

Required: Record the encumbrances in the General Fund general journal and Detail Journal as appropriate. In the Detail Journal, select “Purchase Orders” from the drop down [Transaction Description] menu. You can also type in an alternative description, if desired.

3. [Para. 4-a-3] Cash was received during the year in the total amount of $5,821,280 for collections from the following receivables and cash revenues, as indicated:

Current Property Taxes $1,546,800

Delinquent Property Taxes 360,000

Interest and Penalties Receivable on Taxes 34,270

Due from State Government 500,000

Revenues: (total: $3,380,210)

Sales Taxes 1,886,860

Licenses and Permits 583,800

Fines and Forfeits 423,360

Intergovernmental 168,000

Charges for Services 225,070

Miscellaneous 93,120

Total $5,821,280

Required: Record the receipt of cash and the related credits to receivables and revenues accounts, as applicable, in both the General Fund and governmental activities journals. (Select “Received in Cash” in the drop down [Transaction Description] menu in the Detail Journal related to the General Fund revenue entries.)

For purposes of the governmental activities entries at the government-wide level assume the following classifications:

General Fund Governmental Activities

Sales Taxes General Revenues—Taxes—Sales

Licenses and Permits Program Revenues—General Government—

Charges for Services

Fines and Forfeits Program Revenues—General Government—

Charges for Services

Intergovernmental Program Revenues—Public Safety—Operating

Grants and Contributions

Charges for Services Program Revenues—General Government—

Charges for Services, $140,100

Program Revenues—Culture and Recreation—

Charges for Services, $84,970

Miscellaneous General Revenues—Miscellaneous

4. [Para. 4-a-4] Additional interest and penalties were accrued on delinquent property taxes in the amount of $2,836, of which 10 percent was estimated to be uncollectible. (Note: Round the estimated uncollectible to the nearest whole dollar.)

Required: Record this accrual in both the General Fund and governmental activities general journals.

5. [Para. 4-a-5] General Fund payrolls for the year totaled $3,822,600. Of that amount, $472,040 was withheld for employees' federal income taxes; $291,740 for employees’ share of FICA taxes; $171,610 for employees’ state income taxes; and the remaining $2,887,210 was paid to employees in cash. The City of Smithville does not record encumbrances for payrolls. The payrolls were chargeable against the following functions’ appropriations:

General Government $ 476,376

Public Safety 2,013,110

Public Works 612,881

Health and Welfare 397,673

Culture and Recreation 322,560

Total $3,822,600

Required: Make summary journal entries for payroll in both the General Fund and governmental activities general journals for the year.

6. [Para. 4-a-6] The city’s share of FICA taxes, $291,740, and the city's contribution of $195,380 to retirement funds administered by the state government were recorded as liabilities.

Required: Record this transaction in both the General Fund and governmental activities general journals. Assume that the total $487,120 should be allocated in the same proportions as in paragraph 4-a-5 above; that is:

General Government: ($476,376/$3,822,600) x $487,120 = $60,705

Public Safety: ($2,013,110/$3,822,600) x $487,120 = $256,534

Public Works: ($612,881/$3,822,600) x $487,120 = $78,101

Health and Welfare: ($397,673/$3,822,600) x $487,120 = $50,676

Culture and Recreation: ($322,560/$3,822,600) x $487,120 = $41,104

(Note: The allocated amount for Public Works was rounded up one dollar to compensate for rounding error.)

7. [Para. 4-a-7] Invoices for some of the goods recorded as encumbrances in transaction 4-a-2 were received and vouchered for later payment, as listed below. Related encumbrances were canceled in the amounts shown (Select “Elimination” in the drop down [Transaction Description] menu in the Detail Journal):

Expenditures Encumbrances

General Government $ 93,838 $ 94,752

Public Safety 173,669 173,356

Public Works 190,596 190,512

Health and Welfare 176,400 173,124

Culture and Recreation 109,280 108,927

Miscellaneous 41,160 41,563

$784,943 $782,234

Required: Record the receipt of these goods and the related vouchers payable in both the General Fund and governmental activities journals. At the government-wide level, you should assume the city uses the periodic inventory method. Thus, the invoiced amounts above should be recorded as expenses of the appropriate functions, except that $27,800 of the amount charged to the Public Works function was for a vehicle (debit Equipment for this item at the government-wide level). Expenditures charged to the miscellaneous appropriation should be recorded in this case as General Government expenses at the government-wide level.

8. [Para. 4-a-8] During FY 2014, the City of Smithville received notification that the state government would remit $165,000 to it early in the next fiscal year, although this amount is intended to finance certain public safety operations of the current year. This amount had been anticipated and was included in the budget for the current year as "Intergovernmental Revenue.”