Question

Budgetary transactions and events Prepare journal entries to record the following transactions and events that occurred in Jeter City during calendar year 2022.

1. The city council adopted the following budget: Adopted budget Estimated revenues and other sources:

Property taxes $2,750,000
Sales taxes 1,540,000
Use of fund balance 55,000
Total $4,345,000

Appropriations:
Streets and parkways:
Personal services $858,000
Equipment 104,500
Operating supplies 137,500
All other appropriations 3,245,000
Total $4,345,000

2. The Department of Streets and Parkways (S&P) took bids to purchase several items of equipment. The lowest bid came in at $115,500, which was greater than the amount appropriated for equipment. Jeter City’s budget director, who had the authority to interchange budgetary appropriations amounts within a department, authorized a $11,000 reduction in the department’s personal services appropriation and a corresponding increase in the equipment appropriation.

3. S&P entered into contract S&P 2022a for $115,500, charging the equipment appropriation.

4. S&P issued PO 22-1 for asphalt in the amount of $16,500, charging the operating supplies appropriation.

5. S&P received the equipment, and after inspecting all the items, approved the $115,500 invoice (related to contract in number 3) for payment.

6. S&P received the asphalt and approved the invoice of $16,500 for payment.

Answer 1

Explanation:

Here are the journal entries to record the transactions and events in Jeter City during calendar year 2022:

**Transaction 1:**

The adoption of the budget:

Debit: Estimated Revenues and Other Sources

- Property Taxes: $2,750,000

- Sales Taxes: $1,540,000

- Use of Fund Balance: $55,000

Credit: Appropriations

- Streets and Parkways - Personal Services: $858,000

- Streets and Parkways - Equipment: $104,500

- Streets and Parkways - Operating Supplies: $137,500

- All Other Appropriations: $3,245,000

**Transaction 2:**

Authorization for budget adjustment:

Debit: Streets and Parkways - Personal Services: $11,000

Credit: Streets and Parkways - Equipment: $11,000

**Transaction 3:**

Entry for the purchase of equipment:

Debit: Streets and Parkways - Equipment: $115,500

Credit: Accounts Payable: $115,500

**Transaction 4:**

Purchase Order issued for asphalt:

Debit: Streets and Parkways - Operating Supplies: $16,500

Credit: Encumbrances - Purchase Order: $16,500

**Transaction 5:**

Approval of equipment invoice:

Debit: Accounts Payable: $115,500

Credit: Streets and Parkways - Equipment: $115,500

**Transaction 6:**

Approval of asphalt invoice:

Debit: Encumbrances - Purchase Order: $16,500

Credit: Accounts Payable: $16,500

These journal entries record the budget adoption, budget adjustment, equipment purchase, issuance of a purchase order for asphalt, approval of the equipment and asphalt invoices, and the corresponding debits and credits for each transaction in accordance with governmental accounting principles.