Case Study Problem

The General Fund of Middleville has presented you with the following trial balance as of June 30, 2011.

                                                                                      Debits                 Credits

Cash                                                                               $   40,000

Taxes Receivable- Delinquent                                            142,000

Estimated Uncollectible Taxes- Delinquent                                                    9,100 

Interest and Penalties Receivable                                      32,000

Vouchers Payable                                                                                      24,000

Budgetary Fund Balance-Reserve for Encumbrances                                     10,200

Fund Balance                                                                                             170,700

                                                                                      $ 214,000           $214,000

The information that is being presented to you pertains to the transactions for the city of Middleville for the fiscal year ended June 30, 2012.

1. The following budget was adopted by the city council:

Estimated Revenues:

Property Taxes                                      $ 650,000

Fines and Penalties                                44,000

Licenses and Permits                             150,000

Federal Grant                                       85,000

                                                          929,000

Appropriations and Other Financing Uses

Public Safety                                       402,000

General Government                           263,000

Public Works                                       102,000

Parks and Recreation                           92,000

Transfers Out                                      34,000

                                                         893,000

2. Encumbrances outstanding at the end of the year were re-opened.

3. Property taxes of $ 660,000 were levied. It is estimated that 2.5% of the property taxes levied are expected to be uncollectible.

4. Purchase orders issued for the 2012 fiscal year were as follows:

Public Safety, $ 395,000; General Government, $ 259,000; Public Works, $ 100,000; Parks and Recreation, $ 98,000.

5. Cash collected for the Federal Grant from the Federal Government, $ 94,000.

6. Cash collected and transferred in as follows:

Fines and Penalties         43,000

Licenses and Permits      164,000

7. Cash collected on property taxes were as follows: Current taxes, $559,000, Delinquent Taxes, $ 41,000 and $ 22,000 of interest and penalties were collected.

8. Purchase orders issued in 2012 in the following amounts were filled in at the following amounts:

                                      Estimated              Actual

Public Safety                   $ 395,000             $ 393,600

General Government        $ 259,000             $ 258,200

Public Works                   $ 100,000              $ 99,400

Parks and Recreation       $ 98,000                $ 97,500

                                      $ 852,000              $ 848,700

9. Vouchers paid amounted to $ 840,000 and the transfer out to the Debt Service Fund, $34,000.

10. Please reclassify the Taxes Receivable -Current and Estimated Uncollectible Taxes- Change from Current to Delinquent.

Instructions:

a. Prepare journal entries for the fiscal year ending 2012.

b. Prepare closing entries.

c. Prepare a General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance for the year ended June 30, 2012.

d. Prepare a General Fund Balance Sheet as of June 30, 2012.