P6-9

(Journal entries for several funds and a trial balance for a Debt Service Fund) Following are several transactions that relate to the Village of Brooks Haven in 2012. Prepare all the journal entries necessary to record these transactions. In addition, identify the fund(s) in which each entry is recorded. Also, prepare a trial balance for the Debt Service Fund as of December 31, 2012.

1. The General Fund operating budget was approved. It included estimated revenues of $500,000, appropriations of $400,000, and estimated other financing uses of $90,000.

GF

To Record the Budget:

Estimated Revenue 500,000 |

—Appropriations | 400,000

—Estimated Other Financial use | 90,000

—Budgetary Fund Balance | 10,000

2. Encumbrances of $50,000 were recorded in the General Fund.

GF

Encumbrance 50,000 |

—Budgetary Fund Balance Reserved for Encumbrances | 50,000

3. The budget for the Parks Special Revenue Fund was approved. It included estimated revenues of $60,000 and appropriations of $59,000.

SRF

Estimated Revenue 60,000 |

—Appropriation | 59,000

—Budgetary fund balance | 1,000

4. The General Fund made its annual transfer of $100,000 to a Debt Service Fund.

To Record the GF’s Perspective:

Transfer out/to DSF 100,000 |

—CASH | 100,000

To Record the DSF’s Perspective:

CASH 100,000 |

—Transfer in/from GF | 100,000

5. The Debt Service Fund recorded the liability for principal and interest, $20,000 and $40,000, respectively.

DSF

Expenditure principal 20,000 |

Expenditure interest 40,000 |

—matured principle payable | 20,000

—matured interest payable |40,000

6. The Debt Service Fund invested $10,000 of Debt Service Fund cash in securities.

DSF

Investments - Securities 10,000 |

—CASH | 10,000

7. The salaries of the general governmental administrative staff were paid: $15,000. Assume that salaries were not encumbered.

GF

Expenditure - salaries 15,000 |

—CASH | 15,000

8. The fiscal agent who manages the investment activities of the Debt Service Fund was paid a fee of $1,000.

DSF

Expenditure - fiscal agent 1,000 |

—CASH | 1,000

9. The property tax used to service the bond issue was levied. The total levy was $30,000, of which $29,000 is expected to be collected.

CPF: assumption.

P/T Receivable 30,000 |

—Revenue P/T 29,000 |

—Allowance for uncollectible | 1,000

10. A cash expenditure for office supplies for the mayor’s office was made: $900. The amount that had been encumbered was $1,000.

GF

Budgetary Fund Balance Reserved for Encumbrances 1,000 |

—Encumbrances | 1,000

Expenditure - office supplies 900 |

—CASH | 900

11. Debt Service Fund cash of $60,000 was paid to the fiscal agent to pay interest and principal (see transaction 5).

Cash went down for DSF in this problem.

I do not know how to JE giving the fiscal agent money to spend on our behalf…

I would us a “Transfer to” account, but I have convinced myself that that is only for funds and not for 3rd parties.

To record payment of interest and principal:

Matured principle payable 20,000

Matured interest payable 40,000

—CASH 60,000

TRIAL BALANCE: DSF

Account     |DR|     |CR|

Cash:      29,000

Invest:     10,000

P/T Rec:     30,000

Allow:                         1,000

Rev P/T:                      29,000

OFS:                          100,000

Expend - principle 20,000

Expend - int 40,000

Expend - Fiscal agent 1,000

TOTALS: 130,000 130,000