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Homework answers / question archive / 4-17) Recording Encumbrances and Expenditures

4-17) Recording Encumbrances and Expenditures

Accounting

4-17) Recording Encumbrances and Expenditures. During fiscal year 2017, the City of Hickory Halls issued purchase confers to various vendors 16 the amounts shown far the following functions of the city”

General Government

$ 164,200

Public Safety

    302,000

Public Works

    224,400

Culture and Recreation

    181,700

Health and Welfare

    168,100

Miscellaneous

       24,600

                                             Total

$1,065,000

 

All goods ordered during the year were received at the following actual cots:

General Government

$  159,800

Public Safety

    301,700

Public Works

    226,800

Culture and Recreation

    181,700

Health and Welfare

    171,300

Miscellaneous

      25,600

                                                           Total

$1,066,900

 

Required

a. Prepare a summary journal entry in the General Fund general journal to record the issuance of purchase order during fiscal year 2017. In addition, show subsidiary detail for the Encumbrances ledger.

b. Prepare summary journal entries in the General Fund general journal to record the receipt of and payment for goods during Fiscal year 3117. In addition, show subsidiary detail for the Encumbrances and Expenditures ledgers.

c. Does the fact that the actual cost of goods received during the year exceeded the estimated cost when ordered suggest a budgetary or management problem’?

4-18) On July 1, 2017, the beginning of its fiscal year, Ridge dale County recorded gross property tax levies of $4,200,000. The county estimated that 5 percent of the taxes levied would be uncollectible. As of April 30, 2018, the due date for all Property taxes, the county had collected $3,900,000 in taxes. The county imposed penalties and interest in the amount of $14_500 but only expects to collect $12,800 of that amount. At the end of the fiscal year (June 30, 2018). The county had collected $53,010 in delinquent taxes and $4,800 in interest and penalties on the delinquent taxes.

Required

a. Prepare journal entries to record the tax levy on July 1, 2017, in the General Fund. (Ignore all entries in the governmental activities journal.)

b. Prepare a summary journal entry to record the collection of taxes as of April 30.

c. Prepare the journal entry necessary to reclassify the uncollected tax am cents as delinquent.

d. Prepare the journal entry necessary to record interest and penalties.

e. Prepare a summary journal entry to record the collection of delinquent taxes, interest. And penalties.

f. How does the reporting of revenues from taxes differ from a for-profit company’s recording of revenues and uncollectible accounts?

g. Suppose that a portion of the delinquent taxes considered collectible will not be collected until November of 2018 (12. more than 60 days after year-end). Would this information affect the accounting treatment of the taxes?

4-19 Calculating Required Tux Anticipation Financing and Recording Issuance of Tax Anticipation Notes. The City of Troy collects its annual property taxes late in its fiscal year. Consequently, each yeas it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, 3017, the city estimated that it will require $2,500,000 to finance governmental activities for the remainder of the 2017 fiscal year. On that date, it had $770,000 of cosh on hand and $830,000 of current liabilities. Collections for the remainder of FY 2017 from revenues other than current property taxes and from delinquent property taxes, including interest and penalties. Were estimated at $1,100,000.

Required

a. Calculate the estimated amount of tax anticipation financing that will be required for the remainder of FY 2017. Show work in good form.

b. Assume that on April 2, 2017, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 6 percent per annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and governmental activities at the government wide level.

c. By October 1, 2017, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest. Record the repayment of the tax anticipation notes and interest in the general journals of the General Fund and governmental activities at the government wide level.

 

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