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Chapter Three Problems

This document provides an example accounting problem involving journal entries for budgeted and actual revenues and expenditures of Seaside Township. It asks the reader to: 1) Prepare journal entries to record the budgeted revenues and expenditures. 2) Prepare journal entries to record the actual revenues and expenditures received and paid in cash. 3) Prepare closing entries to close revenue and expenditure accounts to the fund balance. 4) Determine if the change in the fund balance equals the difference between actual revenues and expenditures.

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43 views

Chapter Three Problems

This document provides an example accounting problem involving journal entries for budgeted and actual revenues and expenditures of Seaside Township. It asks the reader to: 1) Prepare journal entries to record the budgeted revenues and expenditures. 2) Prepare journal entries to record the actual revenues and expenditures received and paid in cash. 3) Prepare closing entries to close revenue and expenditure accounts to the fund balance. 4) Determine if the change in the fund balance equals the difference between actual revenues and expenditures.

Uploaded by

Pinky Rose
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter Three Problems

Example 1:
Both budgeted and actual revenue and expenditure are close to the fund balance.
The budgeted and actual revenues and expenditures of Seaside Township for a
recent year (in millions) were as presented in the schedule that follows,
1. Prepare journal entries to record the budget
2. Prepare journal entries to record the actual revenues and expenditures.
Assume all transactions resulted in increases or decreases in cash
3. Prepare journal entries to close the accounts
4. Determine the net change in fund balance. Does it equal the net change in
actual revenues and expenditures.

Budget Actual
Revenues
Property taxes $7.5 $7.6
Sales taxes 2.1 2.4
Other revenues 1.6 1.5
Total revenues $11.2 $11.5

Budget Actual
Expenditures
Wages and salaries $6.2 $6.1
Supplies 3.1 3.0
Other expenditures 1.3 1.2
Total expenditures $10.6 $10.3
Increase in fund balance $0.6 $1.2
1. Opening entry:

Estimated tax revenue 7.5


Estimated sales tax 2.1
Estimated other revenue 1.6
Appropriation wage & salary 6.2
Appropriation supplies 3.1
Other appropriation 1.3
Fund balance 0.6

2. Operating entries:

a) To record actual revenues:

Cash 11.5
Tax revenue 7.6
Sales tax revenue 2.4
Other revenue 1.5

b) To record actual expenditures:

Wage & salary expenditure 6.1


Supplies expenditure 3
Other expenditure 1.2
Cash 10.3
3. Closing entries:

a) To close revenue with estimated revenues:

Tax revenues 7.6


Sales tax revenue 2.4
Other revenue 1.5
Estimated tax revenue 7.5
Estimated sales tax revenue 2.1
Estimated other revenues 1.6
Fund balance 0.3

b) To close expenditures with appropriation:

Appropriation wage & salary 6.2


Appropriation supplies 3.1
Other appropriation 1.3
Wage & salary expenditure 6.1
Supplies expenditure 3
Other expenditure 1.2
Fund balance 0.3

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