The board of commissioners of the City of Hartmoore adopted a General Fund budget for the year ending June 30, 2017, that included revenues of $1,432,500, bond proceeds of $427,500, appropriations of $980,000, and operating transfers out of $480,000. If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? If this budget is formally integrated into the accounting records, what later entry is required?

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Business

Jorge Kane

12 May, 15:11

The board of commissioners of the City of Hartmoore adopted a General Fund budget for the year ending June 30, 2017, that included revenues of $1,432,500, bond proceeds of $427,500, appropriations of $980,000, and operating transfers out of $480,000. If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? If this budget is formally integrated into the accounting records, what later entry is required?

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Derek Gallagher · Answer 1

See explanation section

Explanation:

Req. A

As the general fund budget is formally integrated, the journal entry at the beginning requires to make the revenue debit and appropriations to be credit. And there must be a balancing figure to integrate the operational transfers.

Debit Revenues $1,432,500

Debit Bond proceeds 427,500

Credit Appropriations $980,000

Credit Operating transfers out 480,000

Credit Fund balance (Balance debit - credit) 400,000

Fund balance is the budgetary amount.

Req. B

At the end of the accounting period, the fund balance needs to be removed by making it debit. Most importantly, as the year wears out, all the budgetary plans will be transferred. Therefore, the journal entry is-

Debit Appropriations $980,000

Debit Operating transfers out 480,000

Credit Fund balance (Req. A) $400,000

Credit Revenues $1,432,500

Credit Bond proceeds 427,500