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22 terms

chapter 4: Accounting for Governmental Operating Activities

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Tax anticipation notes
Issued by governments to meet short term cash needs
Taxing power is ample security for banks to make short term loans to governments
General Fund entry to record payroll
Debit Expenditures
Credit Vouchers payable or cash
Credit Due to Federal Government (taxes and FICA)
Credit Due to State Government
Record each departments share as debits in the Expenditures subsidiary ledger
General Fund entry to record government's share of FICA taxes
Debit Expenditures
Credit Due to Federal Government
Record each departments share as debits in the Expenditures subsidiary ledger
General Fund entry to record revenues recognized as received by cash
Debit cash
Credit Revenues
Record details as credits in the Revenues subsidiary ledger
General Fund entry to record property tax levy
Debit Taxes Receivable- Current
Credit Estimated Uncollectible Current Taxes
Credit Revenues
Record details as credits in the Revenues subsidiary ledger
General Fund entry to record collection of current taxes
Debit cash
Credit Taxes Receivable-Current
Gross tax levy
Must be large enough so that the collectible portion equals the revenue needed from this source. Must collect more than needed to account for uncollectible portion.
To calculate amount to collect:
Amount needed/% collectible
Estimated Uncollectible Current Taxes
Contra assets account with a normal credit balance
Imposed nonexchange revenue
Government receives value without directly giving value in exchange and a receivable is debited when there is an enforceable claim and a revenue is credited in the year in which the tax is levied
Ex Property taxes
Delinquent taxes
Any balance of taxes receivable at year end.
Any outstanding Taxes Receivable-Current need to be reclassified
General Fund entry to record reclassification of current property taxes
2 part entry
1. Reclassify current as delinquent
Debit Taxes Receivable-Delinquent
Credit Taxes Receivable-Curretn
2. Reclassify the allowance for estimated uncollectible taxes to the contra account Taxes Receivable-Delinquent
Debit Estimated Uncollectible Current Taxes
Credit Estimates Uncollectible Delinquent Taxes
General Fund entry to record accrual of interest and penalties on delinquent taxes
Debit Interest and Penalties Receivable on Taxes
Credit Estimated Uncollectible Interest and Penalties
Credit Revenues for amount expected to be collected
General Fund entry to record write off of delinquent taxes
Must write off taxes and related interest and penalties
Combine into one entry
To write off taxes:
Debit Estimated Uncollectible Delinquent Taxes
Credit Taxes Receivable- Delinquent
To write off Interest and Penalties
Debit Estimated Uncollectible Interest and Penalties
Credit Interest and Penalties Receivable on Taxes
General Fund entry to record issuance of tax anticipation note
Debit Cash
Credit Tax Anticipation Note Payable
General Fund entry to record repayment of tax anticipation note
Debit Tax Anticipation Note Payable for amount of note
Debit Expenditures for amount of interest charged
Credit Cash
Record in Expenditures ledger as Miscellaneous Appropriations
Internal exchange transactions
Funds that participate should recognize revenues and expenditures or expenses when different basis of accounting are used.
If the same basis of accounting is used, it is recorded as a transfer in and a transfer out.
Budget revisions
They are recorded against the Fund Balance Account
If appropriations increase, debit fund balance
Encumbrances of a prior year
1. Reestablish the prior year's Encumbrances
Debit Encumbrance-2010
Credit Fund Balance
2. Record receipt of goods
Debit Reserve for Encumbrances 2010
Debit Expenditures 2010
Debit Expenditures 2011 for excess*
Credit Encumbrances 2010
Credit Vouchers Payable
*Only if price exceeds, if for less just eliminate that debit
Purchases method
Expenditures for supplies equals the amount purchased for the year regardless of how much was used. Consistent with modified accrual basis. Usually associated with periodic inventory and typical method for governmental funds
Consumption method
Used at government wide level and for proprietary funds because it is full accrual basis. Expense is recorded only for what was used. Perpetual inventory system.
General fund entry for purchase method with periodic inventory system
Debit Expenditures
Credit Cash
Year end adjusting entry to account for the increase in supply. Inventory only becomes an account at the end of the year and only for the amount left over
Debit Inventory
Credit Reserve for inventory
Closing journal entries
2 step process. Use the amounts in the preclosing trial balance
1. Close budgetary accounts by reversing the budget that was recorded at beginning of the year (estimated revenues, estimated other financing sources, Appropriations, estimated other financing uses, and budgetary fund balance)
2. Easy to Close
Close operating statement accounts (revenues, other financing sources, expenditures, and other financing uses and debit or credit fund balance as necessary.
Close encumbrances to fund balance
Every account that has an 'E' in it or 'to' in it is a credit