Tax Accounting

Continuous Problem – City of Monroe d. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year ended December 31, 2015. Confirm that the revenue and expenditure control accounts agree with the following detail and use this information in the Statement: Revenues Expenditures Property Taxes . . . . . . $6,657,500 General Government . . . $1,646,900 Sales Taxes 2,942,000 Public Safety . . . . . . . . . 3,026,900 Interest and Penalties on Taxes . . . . . . . . . . . 16,100 Highways and Streets . . 1,441,400 Licenses and Permits . 800,000 Sanitation . . . . . . . . . . . . 591,400 Intergovernmental Revenue . . . . . . . . . . . 332,000 Health . . . . . . . . . . . . . . 724,100 Miscellaneous Revenue 350,000 Welfare . . . . . . . . . . . . . 374,300 Total . . . . . . . . . . . . $11,097,600 Culture and Recreation . 917,300 Capital Outlay . . . . . . . . 492,800 Total . . . . . . . . . . . . . $9,215,100 e. Prepare in good form a Balance Sheet for the General Fund as of the end of fiscal year, December 31, 2015. 4–C. Part 2. Special Revenue Fund Transactions Required: a. Record journal entries for the following transactions for FY 2015 and post to the general ledger. As there are relatively few revenues and expenditures, the use of control accounts is not necessary. (Make entries directly to individual revenue and expenditure accounts). (1) The state government notified the City that $1,072,000 will be available for street and highway maintenance during 2015 (i.e. the City has met eligibility requirements). The funds are not considered reimbursement-type as defined by GASB standards. (2) Cash in the total amount of $985,000 was received from the state government. (3) Contracts, all eligible for payment from the Street and Highway Fund, were signed in the amount of $1,062,000. (4) Contractual services (see transaction 3) were received; the related contracts amounted to $1,043,000. Invoices amounting to $1,030,500 for these items were approved for payment. The goods and services all were for street and highway maintenance. (5) Investment revenue of $5,120 was earned and received. (6) Accounts payable were paid in the amount of $923,000. (7) All required legal steps were accomplished to increase appropriations in the amount of $4,500. b. Prepare and post the necessary closing entries for the Street and Highway Fund. 5 Continuous Problem – City of Monroe c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the Street and Highway Fund for the fiscal year ended December 31, 2015. d. Prepare a Balance Sheet for the Street and Highway Fund as of December 31, 2015. Assume any unexpended net resources are classified as Restricted Fund Balance. Chapter 5 5–C. Part 1. Capital Projects Fund Transactions The voters of the City of Monroe approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City Jail. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $1,320,000 grant was expected from the state government. Required: a. Open a general journal for the City Jail Annex Construction Fund. Record the following transactions and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2015, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $200,000 premium. Principal amounts of $200,000 each will come due annually over a 20-year period commencing January 1, 2016. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2015. The premium was transferred to the City Jail Debt Service Fund for the future payment of principal on the bonds. (2) The receivable from the state government was recorded. (3) Legal and engineering fees early in the project were paid in the amount of $116,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $250,000. (5) Preliminary plans were approved, and the architects were paid 20 percent of the fee. (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $150,000 to the architects was approved and paid. (7) Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $1,350,000. Payment was approved and vouchered with the exception of a 5 percent retainage. (9) Cash in the full amount of the grant was received from the state government. (10) Furniture and equipment for the annex were ordered at a total cost of $439,500. (11) Payment was made to the contractor for the amount payable (see 8 above). (12) The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was approved for payment and then paid. (13)The furniture and equipment were received at a total actual installed cost of $439,300. Invoices were approved for payment. 6

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