1. RECORD TRANSACTIONS RECORD TRANSACTIONS GOVERNMENTAL FUNDS Chapter 4 12015-2016

2. General Fund Transactions General fund entries Start of fiscal year During the year and adjustments Closing entries 22015-2016

3. Beginning of Year $90 in outstanding purchase orders were included on last year's balance sheet. These are reclassified at the start of the current year. This year's approved budget is recorded. The difference between expected sources of funds and expected uses of funds is credited to the unreserved fund balance. Debit unreserved fund balance if expected uses exceed sources,. Reserve for encumbrances90 Reserve for encumbrances - prior year 90 Estimated revenues3,500 Appropriations 3,320 Estimated other financing uses - transfers out 115 Unreserved fund balance 65 32015-2016

4. Revenue and Collections Record revenues net of the estimated allowance. Separate receivable and allowance accounts are used for this year's taxes and all prior years' taxes. Write-offs occur when the taxes are deemed uncollectible. When they are late, they are simply moved from current to wrong (an adjustment). Taxes receivable - current2,000 Allowance for uncollectibles – current 20 Revenues 1,980 Cash1,900 Taxes receivable – current 1,760 Taxes receivable – previous 140 Allowance for uncollectibles – previous10 Taxes receivable - previous 10 42015-2016

5. Expenditures (Without Encumbrance) and Payments For Expenditures that are not encumbered first (no purchase orders are placed for wages, utilities, and many other items), they are recorded as they become due. These expenditures can be for current services or capital outlays (like fixed assets) Expenditures200 Vouchers payable 200 Vouchers payable187 Cash 187 52015-2016

6. Supplies (without encumbrance) For supplies, this is the consumption method, like most businesses use. Adjustments will recognize supplies used as Expenditures. For the purchase method, Expenditures would be debited at the time of purchase. At year end, an adjusting entry would record Supplies inventory and Reserve for Supplies. Supplies inventory55 Vouchers payable 55 Expenditures345 Vouchers payable 345 62015-2016

7. Expenditures – Prior Year When purchase orders for items are placed in one year and received in the following year, the expenditure is classified separately – for control purposes. These "expenditures" are still included with other expenditures from this year on the Statement of revenues, expenditures and changes in fund balance. Expenditures - prior year85 Vouchers payable 85 72015-2016

8. Adjustments Supplies inventory (consumption method) is adjusted to its proper balance. Revenues that haven't been collected yet and are not expected to be collected in the next 60 days are reclassified. They will be revenue next period when collected. A revenue item may be recorded as deferred revenue initially, if the timing of the collection is known. Grants might be recorded this way. Expenditures30 Supplies inventory 30 Revenues50 Deferred revenue 50 82015-2016

9. Closing the Budget The current year's budget is removed from the books at the end of the year. This entry is a reversal of the initial entry putting the budget on the books. Appropriations3,320 Estimated other financing uses - transfers out115 Unreserved fund balance65 Estimated revenues 3,500 92015-2016

10. Closing Current Year Accounts There may be multiple accounts for other financing sources and uses (transfers in, proceeds from sales of fixed assets, nonreciprocal transfers out). The unreserved fund balance is adjusted for difference between total fund sources and total fund uses. Revenues3,520 Other financing sources - bond proceeds45 Expenditures 3,264 Encumbrances 50 Other financing uses - transfers out 164 Unreserved fund balance 87 102015-2016

11. Closing Prior Year Accounts "Reserve for encumbrances – prior year" is a temporary account established at the start of the year and closed at the end. The "reserve for encumbrance" account is part of fund equity which is on the balance sheet. $90 represents the purchase order that was outstanding at the end of last year, whereas $85 is the actual bill on the goods received. Reserve for encumbrances - prior year90 Expenditures - prior year 85 Unreserved fund balance 5 112015-2016