Governmental Operating Statement

Accounts; Budgetary Accounting

(Examples & Problems)

Assume the following amounts have been legally approved as the
budget for the General Fund of a certain government for the fiscal year
ending December 31, 2011.

Estimated revenue:
Taxes 882,500
Intergovernmental revenues 200,000
Licenses & Permits 195,000
Appropriations:
General government 1,150,000
Public safety 212,000
Estimated other financing uses:
Transfers to other funds 274,500

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As of January 1, 2011, the first day of the fiscal year, the total
Estimated Revenues should be recorded in the General Fund general
ledger control account, and the amounts expected to be recognized
during 2011 from each revenue source specified in the budget should
be recorded in subsidiary ledger accounts.

The total Appropriations and Other Financing Uses legally budgeted

for 2011 for the General Fund of the same government should also be
recorded in the General Fund general ledger control accounts, and the
amounts appropriated for each function itemized in the budget
should be recorded in subsidiary ledger accounts.

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Journal Entries:

General Ledger Subsidiary

Debits Credits Debits Credits
Dr.\Estimated Revenues 1,277,500
Cr.\Budgetary Fund Balance 1,277,500
Estimated Revenues Ledger:
Taxes 882,500
Intergovernmental Revenues 200,000
Licenses and Permits 195,000

Dr.\ Budgetary Fund Balance 1,636,500

Cr.\Appropriations 1,362,000
Cr.\ Estimated other financing uses 274,500
Appropriations Ledger:
General Government 1,150,000
Public Safety 212,000
Estimated other financing uses:
Interfund transfers out to other funds
274,500

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Journal Entries:

General Ledger Subsidiary

Debits Credits Debits Credits
Dr.\Estimated Revenues 1,277,500
Cr.\Budgetary Fund Balance 1,277,500
Estimated Revenues Ledger:
Taxes 882,500
Intergovernmental Revenues 200,000
Licenses and Permits 195,000

Dr.\ Budgetary Fund Balance 1,636,500

Cr.\Appropriations 1,362,000
Cr.\ Estimated other financing uses 274,500
Appropriations Ledger:
General Government 1,150,000
Public Safety 212,000
Estimated other financing uses:
Interfund transfers out to other funds
274,500
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Assume the General Fund of the government collected revenues in
cash during the month of January from Licenses and Permits, $13,200,
and Intergovernmental Revenues, $61,900.

General Ledger Subsidiary

Debits Credits Debits Credits
Dr.\Cash 75,100
Cr.\Revenues 75,100
Revenues Ledger:
Licenses and Permits 13,200
Intergovernmental Revenues 61,900

General Ledger:
Revenue Ledger – General Fund
Class: Licenses and Permits
Date Item Ref. Estimated
Revenues Revenues Balance
Dr. Cr. Dr. (Cr.)
1/1/2011 Budget Estimate $195,000 $195,000
31/1/2011 Collections $13,200 181,800
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Note:
Normally, during a fiscal year, the amount of revenue budgeted from
each source will exceed the amount of revenue from that source
realized to date; consequently, the Balance column will have a debit
balance and may be headed Estimated Revenues Not Yet Realized, or
simply Unrealized Revenues. This amount is a budgetary resource of
the government—legally and realistically budgeted revenues that will
be recognized as assets before the end of the fiscal year.

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Assume the General Fund of the government by the beginning of
January 2011, issue a purchase order for goods with estimated value
$38,000 for general government and $7,500 for public safety.

On January 31, the government received half the goods and the
suppliers invoices are approved for payment for $18,000 for general
government and $3,700 for public safety.

On February 15, the government received the second half of the goods
and the suppliers invoices are approved for payment for $18,500 for
general government and $3,800 for public safety.

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Journal Entries:

General Ledger Subsidiary

Debits Credits Debits Credits
3/1/2011 Dr.\Encumbrances-2011 45,500
Cr.\Reserves for Encumbrances-2011 45,500
Encumbrances Ledger:
General Government 38,000
Public Safety 7,500
31/1/2011 Dr.\Reserve for Encumbrances-2011 22,750
Cr.\ Encumbrances-2011 22,750
Encumbrances Ledger:
General Government 19,000
Public Safety 3,750
31/1/2011 Dr.\Expenditures-2011 21,700
Cr.\ Vouchers Payable 21,700
Expenditures Ledger:
General Government 18,000
Public Safety 3,700

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 General Ledger Subsidiary
Debits Credits Debits Credits
15/2/2011 Dr.\Reserve for Encumbrances-2011 22,750
Cr.\ Encumbrances-2011 22,750
Encumbrances Ledger:
General Government 19,000
Public Safety 3,750
15/2/2011 Dr.\Expenditures-2011 22,300
Cr.\ Vouchers Payable 22,300
Expenditures Ledger:
General Government 18,500
Public Safety 3,800

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 General Ledger:

Appropriations, Expenditures, and Encumbrances Ledger

Fund: General
Year 2011
Function: General Governments
Encumbrances Expenditures Appropriations
Date Reference Cumulative Available
Debits Credits Open Debits Credits
Total Balance
2/1/2011 Budget $1,150,000 $1,150,000
3/1/2011 Purchase orders 38,000 38,000 1,112,000
31/1/2011 Invoices approved 19,000 19,000 18,000 18,000 1,113,000
15/2/2011 Invoices approved 19,000 0 18,500 36,500 1,113,500

Assignment (2): Problem 3-4 & 3-5, p.105

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Problem 3-7, p. 106
Town of Liberty - General Fund
Appropriations, Expenditures, and Encumbrances Ledger
Encumbrances Expenditures Appropriations
Purchase
Reference Cumulative Available
No. Debits Credits Open Debits Credits
Total Balance
Budget 62,200 62,00
350 Purchase order-Computer paper 600 600 61,600
356 Purchase order-Stationary 420 1,020 61,180
370 Purchase order-filing supplies 400 1,420 60,780
350 Invoice 600 820 605 605 60,775
378 Purchase order-Computer 3,160 3,980 57,615
380 Contract for washing office windows 2,000 5,980 55,615
356 Invoice 420 5,560 420 1,025 55,615
Cost of stationary issued to town’s
water utility
(330) 695 55,945

Refund on P.O. 350 (10) 685 55,955

370 Invoice 400 5,160 425 1,110 55,930
380 Invoice 2,000 3,160 2,000 3,110 55,930
385 Purchase order 7,000 10,160 48,930

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Problem 3-7, p. 106
Town of Liberty - General Fund
Appropriations, Expenditures, and Encumbrances Ledger
Encumbrances Expenditures Appropriations
Purchase
Reference Cumulative Available
No. Debits Credits Open Debits Credits
Total Balance
Budget 62,200 62,00
350 Purchase order-Computer paper 600 600 61,600
356 Purchase order-Stationary 420 1,020 61,180
370 Purchase order-filing supplies 400 1,420 60,780
350 Invoice 600 820 605 605 60,775
378 Purchase order-Computer 3,160 3,980 57,615
380 Contract for washing office windows 2,000 5,980 55,615
356 Invoice 420 5,560 420 1,025 55,615
Cost of stationary issued to town’s
water utility
(330) 695 55,945
Refund on P.O. 350 (10) 685 55,955
370 Invoice 400 5,160 425 1,110 55,930
380 Invoice 2,000 3,160 2,000 3,110 55,930
385 Purchase order 7,000 10,160 48,930

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Problem 3-9, p. 106
a)
Date Explanation General Ledger Subsidiary
Debits Credits Debits Credits
01/07/2010 Dr.\Estimated Revenues 2,700,000
Cr.\Budgetary Fund Balance 2,700,000
Estimated Revenues Ledger:
Property taxes 1,900,000
Licenses & permits 350,000
Fines & forfeits 250,000
Intergovernmental revenue 200,000

01/07/2010 Dr.\ Budgetary Fund Balance 2,650,000

Cr.\Appropriations 2,650,000
Appropriations Ledger:
General Government 500,000
Public Safety 1,600,000
Public works 350,000
Parks & Recreation 150,000
Miscellaneous 50,000

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Problem 3-9, p. 106
b)
Date Explanation General Ledger Subsidiary
Debits Credits Debits Credits
--/07/2010 Dr.\Cash 43,000
Cr.\Revenues 43,000
Revenues Ledger:
Licenses and Permits 31,000
Fines & Forfeits 12,000
--/07/2010 Dr.\ Encumbrances - 2011 29,900
Cr.\ Reserves for Encumbrances - 2011 29,900
Encumbrances Ledger:
General Government 7,400
Public Safety 11,300
Public Works 6,100
Parks & Recreation 4,200
Miscellaneous 900

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 Date Explanation General Ledger Subsidiary
Debits Credits Debits Credits
--/07/2010 Dr.\Reserve for Encumbrances-2011 29,100
Cr.\ Encumbrances-2011 29,100
Encumbrances Ledger:
General Government 7,400
Public Safety 10,700
Public Works 5,900
Parks & Recreation 4,200
Miscellaneous 900
--/07/2010 Dr.\Expenditures-2011 29,200
Cr.\ Cash 29,200
Expenditures Ledger:
General Government 7,300
Public Safety 10,800
Public Works 6,100
Parks & Recreation 4,100
Miscellaneous 900

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Problem 3-9, p. 106
c) Revenue General Ledger – General Fund
Date Item Ref. Estimated Revenues
Dr. Revenues Balance
Cr. Dr. (Cr.)
1/7/2010 Budget Estimate $2,700,000 $2,700,000
--/7/2010 Collections $43,000 2,657,000

Revenue Ledger – General Fund

Class: Licenses and Permits
Date Item Ref. Estimated
Revenues Revenues Balance
Dr. Cr. Dr. (Cr.)
1/7/2010 Budget Estimate $350,000 $350,000
--/7/2010 Collections $31,000 319,000

Revenue Ledger – General Fund

Class: Fines & Forfeits
Date Item Ref. Estimated
Revenues Revenues Balance
Dr. Cr. Dr. (Cr.)
1/7/2010 Budget Estimate $250,000 $250,000
--/7/2010 Collections $12,000 238,000 17
Problem 3-9, p. 106
d)
Appropriations, Expenditures, and Encumbrances Ledger
Fund: General
Year 2011
Function: General Governments
Encumbrances Expenditures Appropriations
Date Reference Cumulative Available
Debits Credits Open Debits Credits
Total Balance
1/7/2010 Budget $2,650,000 $2,650,000
--/7/2010 Purchase orders-supplies $29,900 $29,900 2,620,100
--/7/2010 29,100 800 $29,200 $29,200 2,620,000

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