Question

The board of commissioners of the City of Hartmoore adopted a General Fund budget for the year ending June 30, 2017, that included revenues of $1,432,500, bond proceeds of $427,500, appropriations of $980,000, and operating transfers out of $480,000. If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? If this budget is formally integrated into the accounting records, what later entry is required?

Answer 1

Answer:

See explanation section

Explanation:

Req. A

As the general fund budget is formally integrated, the journal entry at the beginning requires to make the revenue debit and appropriations to be credit. And there must be a balancing figure to integrate the operational transfers.

Debit      Revenues                            $1,432,500

Debit      Bond proceeds                        427,500

Credit               Appropriations                                       $980,000

Credit               Operating transfers out                           480,000

Credit               Fund balance (Balance debit - credit)    400,000

Fund balance is the budgetary amount.

Req. B

At the end of the accounting period, the fund balance needs to be removed by making it debit. Most importantly, as the year wears out, all the budgetary plans will be transferred. Therefore, the journal entry is-

Debit      Appropriations                  $980,000

Debit      Operating transfers out      480,000                  

Credit     Fund balance (Req. A)      $400,000

Credit               Revenues                                     $1,432,500

Credit               Bond proceeds                                 427,500