The Balance Sheets of the General Fund and the Street and Highway Fund of the City of Monroe as of December 31, 2014, follow. These (beginning)...
The Balance Sheets of the General Fund and the Street and Highway Fund of the City of
Monroe as of December 31, 2014, follow. These (beginning) balances have been entered in
the proper general ledger accounts, as of 1/1/2015.
CITY OF MONROE
General Fund Balance Sheet
As of December 31, 2014
Assets
Cash $502,000
Taxes receivable $210,000
Less: Estimated uncollectible taxes (42,000)
net 168,000
Interest and penalties receivable on taxes 5,200
Less: Estimated uncollectible interest and penalties (950)
net 4,250
Due from state government 210,000
Total assets $884,250
Liabilities, Deferred Inflows, and Fund Equity
Liabilities:
Accounts payable $ 99,000
Due to other funds 27,000
Total liabilities 126,000
Deferred inflows – Property taxes 21,000
Fund equity:
Fund balance—assigned
(for outstanding encumbrances) $17,000
Fund balance—unassigned 720,250
Total fund balance 737,250
Total liabilities, deferred inflows and fund equity $884,250
CITY OF MONROE
Street and Highway Fund Balance Sheet
As of December 31, 2014
Assets
Cash $21,000
Investments 59,000
Due from state government 109,000
Total assets $189,000
Liabilities and Fund Equity
Liabilities:
Accounts payable $9,000
Fund equity:
Fund balance—assigned for streets and
highways 180,000
Total liabilities and fund equity $189,000
Continuous Problem – City of Monroe
This portion of the continuous problem continues the General Fund and special revenue
fund examples by requiring the recording and posting of the budgetary entries. To
reduce clerical effort required for the solution use control accounts for the budgetary
accounts, revenues, expenditures and encumbrances. Subsidiary accounts are not
required. Budget information for the City includes:
a) As of January 1, 2015, the City Council approved and the mayor signed a budget
calling for $11,250,000 in property tax and other revenue, $9,300,000 in
appropriations for expenditures, and $1,700,000 to be transferred to two debt service
funds for the payment of principal and interest.
b) Also as of January 1, 2015, the City Council approved and the mayor signed a budget
for the Street and Highway Fund that provided for estimated revenues from the state
government in the amount of $1,068,000 and appropriations of $1,047,000.
4–C. Part 1. General Fund Transactions
(1) Encumbrances of $ 17,000 for purchase orders outstanding at the end of 2014
were re-established.
(2) The January 1, 2015, balance in Deferred Inflows – Property Taxes relates to the
amount of the 2014 levy that was expected to be collected more than 60 days
after December 31. This amount should be recognized as 2015 revenues.
(3) A general tax levy in the amount of $6,800,000 was made. It is estimated that 2
percent of the tax will be uncollectible.
(4) Tax anticipation notes in the amount of $500,000 were issued.
(5) Goods and supplies related to all encumbrances outstanding as of December 31,
2014 were received, along with invoices amounting to $16,600; the invoices
were approved for payment. The City maintains immaterial amounts in supply
inventories and it is the practice of the City to charge supplies to expenditure
when received.
(6) All accounts payable and the amount due other funds were paid.
(7) The General Fund collected the following ($ 10,811,500) in cash:
o prior year taxes, $158,000;
o interest and penalties receivable on prior year taxes, $3,500;
o current taxes, $6,400,000;
o $210,000 previously recorded as due from the state government;
o licenses and permits, $800,000;
o sales taxes, $2,890,000; and
o miscellaneous revenues, $350,000.
Continuous Problem – City of Monroe
(8) Purchase orders and contracts were issued in the amount of $3,465,000.
(9) Payrolls for the General Fund totaled $5,070,000. Of that amount, $498,000
were withheld for employees’ federal income taxes and $357,000 were
withheld for employees’ FICA and Medicare tax liability; the balance was paid
in cash. The encumbrance system is not used for payrolls.
(10) The liability for the city’s share of FICA and Medicare taxes, $357,000, was
recorded as was the liability for state unemployment taxes in the amount of
$28,000.
(11) Invoices for most of the supplies and services ordered in transaction 8 were
received in the amount of $3,375,300 and approved for payment. The related
encumbrance amounted to $3,407,000.
(12) Tax anticipation notes were paid at maturity, along with interest in the amount
of $18,000.
(13) Notification was received that an unrestricted state grant in the amount of
$332,000 would be received during the first month of the next year.
(14) The General Fund recorded a liability to the Water and Sewer Fund for services
in the amount of $37,000 and to the Stores and Services Fund for supplies in
the amount of $313,200; $310,000 of the amount due the Stores and Services
Fund was paid.
(15) The General Fund recorded an amount due of $52,000 from the state
government, representing sales taxes to be collected from retail sales taking
place during the last week of the year.
(16) The General Fund paid accounts payable in the amount of $3,015,000 and paid
the amounts due the federal and state governments. The General Fund also
transferred to the debt service funds cash in the amount of $1,662,000 for the
recurring payment of principal and interest.
(17) All required legal steps were accomplished to increase appropriations by the
net amount of $212,000. Estimated revenues were increased by $73,000.
(18) The City Council authorized a write-off of $51,000 in delinquent property taxes
and corresponding interest and penalties amounting to $1,600.
(19) Interest and penalties receivable on taxes were accrued in the amount of
$17,200; $1,100 of this amount is expected to be uncollectible.
(20) It is estimated that $27,500 of the outstanding taxes receivable will be collected
more than 60 days beyond the fiscal year-end.
c. Prepare and post the closing entries for the General Fund. Outstanding encumbrances at
year end are classified as Assigned Fund Balance and all remaining net resources are
classified as Unassigned Fund Balance.
d. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year
ended December 31, 2015. Confirm that the revenue and expenditure control accounts
agree with the following detail and use this information in the Statement:
Revenues Expenditures
Property Taxes . . . . . . $6,657,500 General Government . . . $1,646,900
Sales Taxes 2,942,000 Public Safety . . . . . . . . . 3,026,900
Interest and Penalties
on Taxes . . . . . . . . . . . 16,100 Highways and Streets . . 1,441,400
Licenses and Permits . 800,000 Sanitation . . . . . . . . . . . . 591,400
Intergovernmental
Revenue . . . . . . . . . . . 332,000 Health . . . . . . . . . . . . . . 724,100
Miscellaneous Revenue 350,000 Welfare . . . . . . . . . . . . . 374,300
Total . . . . . . . . . . . . $11,097,600 Culture and Recreation . 917,300
Capital Outlay . . . . . . . . 492,800
Total . . . . . . . . . . . . . $9,215,100
e. Prepare in good form a Balance Sheet for the General Fund as of the end of fiscal year,
December 31, 2015.
