Please explain how I would go about doing this.
Indicate which of the following transactions require entries to accounts used only for budgetary control purposes, even if other accounts also are involved. Prepare the general journal entries required. Assuming a beginning total fund balance of $1,000,000, what would the total fund balance be after taking into consideration the effects of these transactions?
Adopted the budget—estimated revenues of $5,000,000 and appropriations of $4,900,000.
Levied property taxes of $3,500,000. One percent has been uncollectible historically.
Paid salaries of $2,700,000.
Hired a new director of public works at an agreed salary of $60,000.
Ordered materials and supplies expected to cost $103,000.
Amended the appropriation for public works to increase it by $10,000.
Received half of the materials and supplies order at an actual cost of $51,500.
To determine which transactions require entries to accounts used only for budgetary control purposes, we need to review the nature of each transaction.
1. Adopted the budget—estimated revenues of $5,000,000 and appropriations of $4,900,000.
This transaction involves the initial budget adoption. It requires entries in budgetary accounts to track estimated revenues and appropriations. Typically, this involves recording the estimated revenues in a revenue budget account and the appropriations in an expenditure budget account.
2. Levied property taxes of $3,500,000. One percent has been uncollectible historically.
This transaction involves levying property taxes. It may require a journal entry in a revenue budget account to record the estimated revenue from property taxes. Additionally, there may be an entry in an allowance for uncollectible accounts budget account to account for the estimated uncollectible portion.
3. Paid salaries of $2,700,000.
This transaction involves paying salaries. It does not require entries in budgetary accounts since it is an actual expenditure. Entries will be made in the appropriate expense accounts, such as salaries expense.
4. Hired a new director of public works at an agreed salary of $60,000.
This transaction involves hiring a new employee. It does not require entries in budgetary accounts since it is not directly related to the budget.
5. Ordered materials and supplies expected to cost $103,000.
This transaction involves ordering materials and supplies. It does not require entries in budgetary accounts since it is a commitment rather than an expenditure. The expenditure will be recorded once the materials and supplies are received.
6. Amended the appropriation for public works to increase it by $10,000.
This transaction involves amending the appropriation for public works. It requires entries in budgetary accounts, particularly in the expenditure budget account for public works, to reflect the increased appropriation.
7. Received half of the materials and supplies order at an actual cost of $51,500.
This transaction involves receiving part of the materials and supplies order. It does not require entries in budgetary accounts since it is an actual expenditure. Entries will be made in the appropriate expense accounts, such as materials and supplies expense.
To calculate the total fund balance after considering the effects of these transactions, we need to summarize the impact of each transaction on the fund balance. In this case, we start with a beginning total fund balance of $1,000,000.
1. Adopted the budget: No immediate impact on fund balance.
2. Levied property taxes: Estimated revenue of $3,500,000 increases fund balance. Allowance for uncollectible accounts decreases fund balance.
3. Paid salaries: Actual expenditure of $2,700,000 decreases fund balance.
4. Hired a new director: No immediate impact on fund balance.
5. Ordered materials and supplies: No immediate impact on fund balance.
6. Amended the appropriation: No immediate impact on fund balance.
7. Received half of the materials and supplies order: Actual expenditure of $51,500 decreases fund balance proportionally.
To calculate the final fund balance, we need to add or subtract the net impact of these transactions from the beginning fund balance of $1,000,000.