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Prepare journal entries in general journal form to record the events & transactions. This includes recording transactions for the Brownsville School District, City of Rome, and City of Buffalo Falls general funds. You should focus on the correct accounts and amounts for each transaction, including initial balances, encumbrances, purchases, receipts, expenditures, and closing entries. Additionally, prepare financial statements such as the statement of revenues, expenditures, and changes in fund balance, as well as a balance sheet for the general funds, assuming no restricted or assigned net resources and that outstanding encumbrances are legally committed by contractual obligation.

Paper For Above instruction

The preparation of journal entries and financial statements for governmental funds, such as the General Fund of school districts and municipalities, requires a comprehensive understanding of fund accounting principles. This paper discusses the general procedures and specific transactions involved in recording events, closing entries, and preparing financial statements, illustrated through examples involving the Brownsville School District, City of Rome, and City of Buffalo Falls.

Introduction

Governmental accounting focuses on maintaining accountability and transparency through fund accounting, which segregates resources for specific purposes. The General Fund, being the primary operating fund, records most financial activities including revenues, expenditures, and encumbrances. Accurate recording via journal entries and presentation through financial statements are crucial for stakeholders and auditors to assess financial health and compliance.

Journal Entries for Brownsville School District

The Brownsville School District's transactions encompass re-establishing previous encumbrances, ordering supplies, receiving goods, and contracting services. For example, re-encumbering outstanding commitments from the previous year involves debiting Encumbrances Outstanding and crediting Reserve for Encumbrances. When textbooks are ordered, the district debits Encumbrances and credits Budgetary Fund Balance – Reserved for Encumbrances. Upon receipt of textbooks and band instruments, the district capitalizes these assets by debiting Supplies Inventory and Equipment with corresponding credits to Accounts Payable or Cash. The district recognizes expenditures and reduces encumbrances accordingly, ensuring accurate expense recognition and asset management.

Transactions for City of Buffalo Falls

The City of Buffalo Falls' transactions include the initial balances, budget approval, tax levies, collections, contracted services, expenditures, and year-end closing. For example, recording property tax levy involves debiting Taxes Receivable and crediting the Revenue account. Cash collections are debited to Cash and credited to Taxes Receivable and other revenue as received. When contracts are issued and performed, entries involve debiting Contracted Services Expenditures and crediting Accounts Payable or Cash upon payment. Year-end adjustments involve closing entries that transfer revenues and expenditures to Fund Balance. Additionally, preparing financial statements entails summarizing these transactions into a statement of revenues, expenditures, and changes in fund balance, and a balance sheet displaying assets, liabilities, and fund balances.

Preparation of Financial Statements

The Statement of Revenues, Expenditures, and Changes in Fund Balance provides an overview of the financial activity over the fiscal year, indicating whether the fund experienced an increase or decrease in resources. The balance sheet reflects the asset and liability position at year-end, highlighting financial stability. For the City of Buffalo Falls, the balance sheet would show total assets, liabilities, and unencumbered fund balance. Since encumbrances are legally binding, they are included in the committed category of fund balance.

Analysis and Conclusion

Accurate and timely journal entries are essential for maintaining accountability in governmental accounting. They facilitate transparent reporting, help identify variances between budgeted and actual amounts, and ensure compliance with legal and fiscal policies. The examples of Brownsville School District and the City of Buffalo Falls demonstrate the importance of diligent bookkeeping, especially concerning encumbrances, budgetary control, and year-end closing procedures.

Effective financial reporting, including the statement of revenues and expenditures and the balance sheet, aids decision-makers and stakeholders in assessing fiscal health. The assumptions made regarding unspent resources and encumbrances ensure that the financial statements accurately reflect the fund's legal and economic position.

References

• Bailey, W. R., & Pincus, K. (2016). Governmental & Nonprofit Accounting (12th ed.). Pearson.
• Gauthier, J. P., & Nelson, L. (2018). Introduction to Governmental and Nonprofit Accounting. McGraw-Hill Education.
• Homer, P. J., & Sylla, R. (2020). Governmental Accounting: Concepts and Practices. McGraw-Hill.
• Governmental Accounting Standards Board (GASB). (2022). Standards for State and Local Governments. GASB.
• Libby, T., & Libby, R. (2018). Financial Accounting. McGraw-Hill Education.
• Messick, R. (2017). The Basics of Governmental Accounting, Journal of Government Financial Management, 66(2), 45-52.
• Schmitz, S., & Harrell, M. (2019). Fund Accounting for Local Governments. Routledge.
• U.S. Government Accountability Office. (2020). Financial Audit Manual. GAO.
• Watts, R. L., & Zimmerman, J. L. (1986). Beyond Dollar Diagnoses of Corporate Annual Reports: A Critical Review of the Role of Financial Ratios. Accounting Review, 61(4), 691–703.
• Young, D. W., & Specking, K. (2017). Fiscal Accountability in Public Sector Accounting. Springer Publishing.