Tax Accounting

Continuous Problem – City of Monroe Continuous Problem – City of Monroe TO A CCOMPANY E SSENTIALS OF A CCOUNTING FOR G OVERNMENTAL AND N OT - FOR -P ROFIT O RGANIZATIONS : T WELFTH E DITION Chapters 2 through 8 describe accounting and financial reporting by state and local governments. A continuous problem is presented to provide an overview of the reporting process, including preparation of fund basis and government-wide statements. The problem assumes the government is using fund accounting for its internal record-keeping and then at year-end makes necessary adjustments to prepare the government-wide statements. The problem that follows is presented in the same order as the textbook (beginning with Chapters 3, and 4). Each chapter requires the preparation of journal entries to record the events and transactions of governmental, proprietary, or fiduciary funds. For the General Fund, use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. For all other funds, use separate accounts for each type of revenue and expenditure/expense. At appropriate stages, preparation of the fund and government-wide statements are required. The following funds are included in this series of problems: Governmental Funds  General  Special revenue—Street and Highway Fund  Capital projects—City Hall Annex Construction Fund  Debt service—City Jail Annex Debt Service Fund  Debt service—City Hall Debt Service Fund Proprietary Funds  Internal service—Stores and Services Fund  Enterprise—Water and Sewer Fund Fiduciary Funds  Private-purpose—Student Scholarship Fund  Pension trust—Fire and Police Retirement Fund Chapters 3 & 4 The Balance Sheets of the General Fund and the Street and Highway Fund of the City of Monroe as of December 31, 2014, follow. These (beginning) balances have been entered in the proper general ledger accounts, as of 1/1/2015. 1 Continuous Problem – City of Monroe CITY OF MONROE General Fund Balance Sheet As of December 31, 2014 Assets Cash $502,000 Taxes receivable $210,000 Less: Estimated uncollectible taxes (42,000) net 168,000 Interest and penalties receivable on taxes 5,200 Less: Estimated uncollectible interest and penalties (950) net 4,250 Due from state government 210,000 Total assets $884,250 Liabilities, Deferred Inflows, and Fund Equity Liabilities: Accounts payable $ 99,000 Due to other funds 27,000 Total liabilities 126,000 Deferred inflows – Property taxes 21,000 Fund equity: Fund balance—assigned (for outstanding encumbrances) $17,000 Fund balance—unassigned 720,250 Total fund balance 737,250 Total liabilities, deferred inflows and fund equity $884,250   CITY OF MONROE Street and Highway Fund Balance Sheet As of December 31, 2014 Assets Cash $21,000 Investments 59,000 Due from state government 109,000 Total assets $189,000 Liabilities and Fund Equity Liabilities: Accounts payable $9,000 Fund equity: Fund balance—assigned for streets and highways 180,000 2

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