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Hi everybody, I have a excercise and itsanswer, but I don't
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Hi everybody, I have a excercise and itsanswer, but I don't understand step 1 in answer. Help me, please! Thanksall:)) 

A general ledger trial balance at June30,2011, for Millar City is as follows:

                                                                                           Debits           Credits
Cash                                                                                    $12,000            
Taxes receivable                                                                  30,000           
Allowance for uncollectible taxes                                                        $ 2,000
Due from other funds                                                          3,000  
Supplies inventory, June 30, 2014                                       4,000 
Estimated revenues                                                         300,000  
Expenditures                                                                     290,000 
Expenditures - prior year                                                     5,000 
Encumbrances                                                                       6,000
Vouchers payable                                                                                             13,000
Due to other funds                                                                                             5,000
Reserve for encumbrances                                                                               6,000
Reserve for encumbrances - prior year                                                           5,000
Fund balance - nonspendable                                                                           4,000
Fund balance - unassigned                                                                              10,000
Appropriations                                                                                                 300,000
Revenues                                                                                                         305,000
                                                                                              650,000               650,000
  

Millar City uses a purchases basis inaccounting for supplies. Open encumbraces are considered constrained by thehighest decision-making level of the city.

REQUIRED: Prepare a fund balance sheet asof June 30, 2011.

answer
Hi everybody, I have a excercise and its answer, but I don't understand step 1 in answer.

 

Help me, please! Thanks all:))

 

A general ledger trial balance at June 30,2011, for Millar City is as follows:

 

Debits

 

Cash

 


 

$ 12,000

 


 

Taxes receivable

 


 

30,000

 


 

Allowance for uncollectible taxes

 


 

$ 2,000

 


 

Due from other funds

 


 

3,000

 


 

Supplies inventory, June 30, 2014

 


 

4,000

 


 

Estimated revenues

 

Expenditures

 

Expenditures - prior year

 


 

Credits

 


 

300,000

 

290,000

 

5,000

 


 

Encumbrances

 


 

6,000

 


 

Vouchers payable

 


 

13,000

 


 

Due to other funds

 


 

5,000

 


 

Reserve for encumbrances

 


 

6,000

 


 

Reserve for encumbrances - prior year

 


 

5,000

 


 

Fund balance - nonspendable

 


 

4,000

 


 

Fund balance - unassigned

 


 

10,000

 


 

Appropriations

 


 

300,000

 


 

Revenues

 


 

305,000

 

650,000

 


 

650,000

 


 

Millar City uses a purchases basis in accounting for supplies. Open encumbraces are

 

considered constrained by the highest decision-making level of the city.

 

REQUIRED: Prepare a fund balance sheet as of June 30, 2011.

 

answer

 

step 1: Adjustment:

 


 

To adjust the supplies expenditure and vouchers payable accounts using purchase

 

method

 


 

Expentitures

 


 

2,00

 

0

 


 

Voucher

 

payable

 


 

2,00

 

0

 


 

Step 2: Closing entries

 

To close the budget

 

2. To close current year accounts

 

3. To close prior year accounts

 


 

Reserve for encumbrances prior year

 

5,000

 


 

Expenditures - prior

 

year

 

5,000

 


 

 







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