Fund balance

  • Creator
    Topic
  • #194070
    Anonymous
    Inactive

    For the dr fund balance assigned of 132,000 and the cr fund balance committed of 132,000, is that referring to the 132,000 that is spent this year or the 132,000 that is going to be spent next year?


    Carlson City’s fiscal year ends December 31. On August 1, the city issued a purchase order for new vehicles to be delivered at the rate of two per month beginning October 15. Twelve vehicles were delivered as scheduled and payments of $264,000 were made from the general fund upon delivery. If these were the only transactions made by the city, and the city started the year with just enough cash to complete these transactions, which of the following balances would appear on the balance sheet as of December 31?

    A. Encumbrances $132,000

    Reserve for encumbrances 132,000

    B. Fund balance unassigned $132,000

    Fund balance–committed 132,000

    C. Fund balance–committed $264,000

    Fund balance–unassigned 264,000

    D. Encumbrances $264,000

    Reserve for encumbrances 264,000

    Answer B. The correct answer is:

    Dr. Fund balance unassigned $132,000

    Cr. Fund balance–committed 132,000

    It appears the general fund started with a fund balance of $132,000 if it held only enough cash to pay for the six vehicles delivered in October, November, and December. The fund balance would have been debited $264,000 when expenditures were closed and outstanding encumbrances removed at year-end, leaving a debit balance of $132,000. The remaining encumbered amount would be disclosed as the fund balance category called “Fund balance—committed.” (The city simply reversed encumbrances at year-end, and then displayed the ending fund balance in two amounts—committed and unassigned.) Further, the amount of fund balance set aside due to the outstanding encumbrances could be labeled “Fund balance—assigned” as well as “Fund balance—committed” depending on whether the original agreement to purchase the vehicles had been approved at the highest level of the government. The remaining fund balance, a deficit amount in this case, would be labeled “unassigned.”

Viewing 1 replies (of 1 total)
  • Author
    Replies
  • #666458
    Anonymous
    Inactive

    I'm guessing this is for next year?

Viewing 1 replies (of 1 total)
  • You must be logged in to reply to this topic.