Exercise1
Prepare journalentries to record the following transactions for Riyadhtown for2018. The Town records encumbrances only for its Suppliesappropriation.
a. Riyadhtownadopted the following budget for theyear:
Revenues:
Propertytaxes SAR 375,000
Licenses andfees 35,000
Appropriations:
Salaries 255,000
Supplies 40,000
Interest 1,500
b. Property tax bills amounting to SAR375,000 were sentto the property owners.
c. Because property taxes were not due to bereceived for several months and the town needed cash to finance itsactivities, Riyadhtown borrowed SAR 100,000 from a local bank usingtax anticipation notes.
d. Riyadhtownpaid salaries in the amount of SAR95,000.
e. The town sent out two purchase orders forsupplies: purchase order A for SAR6,000 and purchase order B forSAR5,000.
f. The town received SAR 130,000 from propertyowners in payment of their property taxes.
g. Riyadhtownrepaid the bank on its borrowing intransaction c. The amount paid was SAR101,000, which includedinterest of SAR1,000.
h. The town collected SAR 25,000 for fishinglicenses.
i. The town received the supplies ordered onpurchase order A in transaction e. All the supplies arrived in goodcondition and the invoice for SAR 6,300 was approved forpayment.
j. The town Treasurer paid the invoice intransaction i. for SAR6,300.
Answer:
Exercise2
The preclosing trialbalance of the General Fund for the City of Dammam shows thefollowing balances at the end of its fiscal year.
Budgetary fund balance SAR 20,000
Fund balance, beginning(actual) 250,000
Estimatedrevenues 630,000
Appropriations 610,000
Revenues(actual) 625,000
Expenditures 605,000
Based on informationpresented above:
- Prepare closing entries for the budgetary and financialaccounts.
- Calculate the ending fund balance for the city of Dammam. (Showyour work.)
