ACCY 161 Spring 2013 Practice Exercise #1 - Example of B !getar" Acco nting P rpose# B !getar" control o$er expen!

!it res an! re$en e% &'e follo(ing transactions 'a$e occ rre! for t'e Cit" of )else"$ille% Yo s'o l! post t'e transactions in t'e t-acco nts on t'e next page% *se of t'e t-acco nts allo(s "o to +acc m late, t'e -alances% .n t'e exam "o (ill also nee! to post t'e /o rnal entries% &'e /o rnal entries (ill -e fo n! on t'e ans(er 0e"% &'e last step is to post t'e transactions to t'e le!gers t'ese are t'e same le!gers fo n! in t'e text% Yo mig't fin! it 'elpf l to (or0 (it' someone from class on t'is% 1 (ill also open p a +!isc ssion, on Blac0Boar! for "o to post 2 estions an! comments% &'is is $er" similar to ('at "o (ill see on t'e exam3 - t not as long% &'ere is not'ing to s -mit for t'is exercise% 1. &. The City of Kelseyville has an opening fund balance of $3,000, cash of $4,000 and vouchers payable of $1,000 so Assets !ouches "ayable # $und %alance. The city council passed a revenue budget for $&0,000. All the revenue is for the general fund ' the effect of this entry is to add to the fund balance by the a(ount of budgeted inflo) of assets to the city. The city no) has a budgetary fund balance of $&3,000. They also passed an e*penditure budget +so(eti(es called an appropriations budget, for $1-,000 ' the effect of this entry is to subtract fro( the fund balance by the a(ount of the budgeted outflo) of assets fro( the city "urchase orders for $.,000 )ere issued. &'is is ('ere - !getar" control starts at t'e operational instea! of t'e - !geting le$el 4 t'e effect of t'is entr" is to +enc m-er, or reser$e 563000 of t'e appropriation% &'is !one (it' t'e accompan"ing le!ger t'at reports t'e +A$aila-le Appropriation%, &'e cre!it si!e of t'is entr" is to t'e 7eser$e for Enc m-rances 8or . tstan!ing Enc m-rances9 ('ic' is a f n! -alance acco nt% :on;t concern "o rself (it' t'is acco nt for no( treat it as a 'ol!ing acco nt (e re$isit t'is acco nt in C'apter <ine% /f the purchase orders that )ere issued, ship(ents )ere received for $4,000 of those goods. This is a partial ship(ent ' the effect is to reduce the encu(brances by the $4,000 as )e no) have only $1,000 of outstanding purchase orders. 0hat )e say here is that 12)e reverse the encu(brance23 5evenue )as collected of $3,000. The invoices for the ship(ents in 7te( 8. totals $4,100. The additional $100 )as approved for pay(ent and the re9uired :ournal entries )ere (ade. ' The a(ount encu(bered )as an esti(ate and the actual a(ount can differ. This is )here tolerances are used. Additional purchase orders of $&,000 )ere issued. !ouchers of $1,.00 are paid 5evenue )as collected for $.00 $.00 of "/<s cancelled ' this adds bac= to the available appropriations >ood that )ere ordered for $1,000 )ere received and the related invoices totaled $-.0 An e(ergency purchase as (ade for repairs for $.00 )ithout a purchase order. "ayroll pay(ents of $&..00 )as (ade &0.444.&4.doc "age 1 of 4

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ACCY 161 Spring 2013 Practice Exercise #1 - Example of B !getar" Acco nting Post the above transactions to the t-accounts below. Then enter the ending balances in each of the accounts. BB means beginning balance Estimate! 7e$en es Appropriations = n! Balance 33000 - BB

Enc m-rances

7eser$e for Enc m-rances

Expen!it res

>o c'ers Pa"a-le 13000 - BB

Cas' BB - ?3000

Act al 7e$en e

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"age & of 4

ACCY 161 Spring 2013 Practice Exercise #1 - Example of B !getar" Acco nting After you have posted the transactions to the t-accounts on the previous page, post the appropriate transactions to the Appropriations E penditures Encumbrances !edger below and reconcile the totals in the ledger to the account balances.
Appropriations Expen!it res Enc m-rances @e!ger See 1ll stration 3-A 5ef Transaction Enc m-rances ?r Cr /pen Expen!it res ?r %alance Appropriations Credit Available

"ow post the #revenue$ transactions below

7e$en e @e!ger See 1ll stration 3-B
5ef Transaction @sti(ated 5evenues A?r Actual 5evenues A Cr %alance

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"age 3 of 4

ACCY 161 Spring 2013 Practice Exercise #1 - Example of B !getar" Acco nting %ere is a general &ournal form if you want to post the entries in &ournal form. Ceneral Do rnal 7ef Acco nt :r Cr

&0.444.&4.doc

"age 4 of 4