General Fund Adjustments. The City of Allenton has engaged you to examine its June 20, 2011, financial statements. You are the first CPA ever engaged by the city and you find that the city’s accounting staff is unfamiliar with GAAP accounting and reporting requirements. Following is the pre-closing trial balance of the General Fund as of June 30, 2011. Additional information is as follows:
1. The estimated uncollectible amount of $18,000 for current-year taxes receivable was determined to be adequate. The tax year coincides with the fiscal year.
2. The city purchased $66,000 of equipment during the year.
3. The Expenditures—Principal account reflects the annual retirement of general obligation bonds issued in 2010. Interest payments of $12,000 for this bond issue are included in the Expenditures—Other accounts.
4. The General Fund’s outstanding purchase orders as of June 30. 2011, totaled $11,300. These purchase orders were not recorded in the books.
5. The balance in the Revenues account included a credit of $100,000 for a note issued to a bank to obtain cash in anticipation of property tax collections, and a credit of $120,000 for donated land to be used by public works. As of June 30, 2011, the note was still outstanding. Required
The foregoing information disclosed by your examination was recorded only in the General Fund even though a debt service fund is used to account for debt, using resources provided by the General Fund. Prepare the adjusting journal entries necessary to correct the General Fund and to record information for the debt service fund, assuming the financial statements are to be prepared in conformity with GAAP. Get Accounting Help Today