Gov & Non Profit 3-3 - 3-10 Solutions, 15e

Gov & Non Profit 3-3 - 3-10 Solutions, 15e - Chapter 03...

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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting CHAPTER 3: GOVERNMENTAL OPERATING STATEMENT ACCOUNTS; BUDGETARY ACCOUNTING Chapter 3, Solutions (Cont’d) 3-3. a. The answer is no to both parts of the question. Subject to an ordinance or policy that requires a minimum end-of-year fund balance, any unreserved fund balance above that amount can be considered available for appropriation in the same manner as revenues and other financing sources. Consequently, if the sum of any excess fund balance and estimated revenues exceeds appropriations, then village officials would be in compliance with any balanced budget requirement. In fact, legislative bodies often budget the use of a portion of fund balance if it exceeds any minimum requirement established by law or policy. b. Fund Balance at 6-30-2010 after all closing entries will be $595,000, as shown below: FUND BALANCE $ 580,000 Balance as of 6-30-2009 3,190,000 To close revenues for the year (3,175,000 ) To close expenditures for the year $ 595,000 Balance as of 6-30-2010 Note: Estimated Revenues and Appropriations are closed to Budgetary Fund Balance by reversing the original budgetary entry. So the balance of Budgetary Fund Balance will be zero. 3-4. City of Marion a . Estimated revenues total—FY 2011 $ 4,650,000 Appropriations total—FY 2011 4,800,000 Therefore, fund balance at the end of FY 2010 must be at least $ 150,000 3-1
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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting or else the fund would be thrown into a deficit. 3-2
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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting Ch. 3, Solutions, 3-4 (Cont’d) General Ledger Subsidiary Ledger Debits Credits Debits Credits b . ESTIMATED REVENUES 4,650,000 BUDGETARY FUND BALANCE 150,000 APPROPRIATIONS 4,800,000 Estimated Revenues Ledger: TAXES 3,000,000 INTERGOVERNMENTAL REVENUES 1,000,000 LICENSES AND PERMITS 400,000 FINES AND FORFEITS 150,000 MISCELLANEOUS REVENUES 100,000 Appropriations Ledger : GENERAL GOVERNMENT 950,000 PUBLIC SAFETY 2,000,000 PUBLIC WORKS 950,000 HEALTH AND WELFARE 850,000 MISCELLANEOUS 50,000 3-3
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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting Ch. 3, Solutions (Cont'd) 3-5. General Ledger Subsidiary Ledger Debits Credits Debits Credits a . ENCUMBRANCES 2011 394,000 RESERVE FOR ENCUMBRANCES 2011 394,000 Encumbrances Ledger : GENERAL GOVERNMENT 50,000 PUBLIC SAFETY 200,000 PUBLIC WORKS 75,000 HEALTH AND WELFARE 65,000 MISCELLANEOUS 4,000 b . Purchase orders issued by a governmental fund have the effect of using all or a portion of one or more appropriations for that fund. Issuance of purchase orders or other commitment documents is a step in the expenditure of an appropriation; administrators may be subject to legal penalties if they expend more resources than were appropriated. Recording encumbrances helps administrators avoid overexpending appropriations. The same legal issues do not exist in business organizations, although a
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Gov & Non Profit 3-3 - 3-10 Solutions, 15e - Chapter 03...

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