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Accounting Entries. An Overview of Basic Y ear E nd and Accrual E ntries. Steps for Closing the Year. 1. Most importantly – Make sure your bank reconciliations agree to the general ledger.
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Accounting Entries An Overview of Basic Year End and Accrual Entries
Steps for Closing the Year • 1. Most importantly – Make sure your bank reconciliations agree to the general ledger. • 2. Review the open order report and determine whether open orders are accounts payable or reserve for encumbrances • Accounts Payable – Goods received or services rendered prior to June 30. • Reserve for Encumbrances – Goods ordered prior to June 30 but not received as of June 30. • Make sure the open order report balances agree to the general ledger balances • 3. Analyze balance sheet accounts • A detailed listing of what comprises the total account balance should be available for audit • For example: a detailed list of what makes up the State Aid Receivable balance: • Final state aid payment $100,000 • Extraordinary aid $50,000 • Non-public transportation aid $10,000 • Total $160,000 • 4. Post accrual entries • 5. Post adjusting entries • 6. Post year end entries
Accrual Entries • Accrual of revenues earned but not received as of June 30 • Example 1 – Accrual of extraordinary aid Dr. 10-141 State Aid Receivable $50,000 Cr. 10-302 Revenue (10-3131) 50,000 Desc: To record extraordinary aid receivable
Accrual Entries (Cont’d) • Accrual of revenues earned but not received as of June 30 (cont’d) • Example 2 – Accrual of tuition receivable (from other LEA) Dr. 10-143 Intergovernmental Accounts Receivable-Other $5,000 Cr. 10-302 Revenue (10-1320) 5,000 Desc: To record tuition due from other LEA
Accrual Entries (Cont’d) • Accrual of interfund receivable • Example 3 – Accrual of interfund for interest received in capital projects fund due to debt service fund • This entry assumes that the interest originally was posted as revenue in the capital projects fund Dr. 40-132 Interfund Accounts Receivable $100 Cr. 40-302 Revenue (40-1510) 100 Dr. 30-302 Revenue (30-1510) $100 Cr. 30-402 Interfund Accounts Payable 100 Desc: To record interest due to debt service fund
Adjusting Entries • Example 1 - To record an increase to capital reserve (June Board resolution) Dr. 10-770 Unreserved Fund Balance $100,000 Cr. 10-761 Res. Fund Balance-Capital Reserve 100,000 Desc: To record increase to capital reserve • Example 2 - To anticipate additional fund balance during the year • To anticipate prior year extraordinary aid excluded from excess surplus Dr. 10-770 Unreserved Fund Balance $75,000 Cr. 10-602 Expenditures (budget account #) 75,000 Desc: To record anticipated fund balance
Adjusting Entries (Cont’d) • Example 3 – To liquidate interfund • To eliminate the interfund set up in accrual entry # 3 • Make the following entry at the time the cash is transferred Dr. 40-101 Cash $100 Cr. 40-132 Interfund Accounts Receivable 100 Dr. 30-402 Interfund Accounts Payable $100 Cr. 30-101 Cash 100 Desc: To record liquidation of interfund
Year End Entries • This is an overview of basic year end entries. Your general ledger software may or may not make these entries for you during the year end closing process • General Fund • Example 1 – To close budgeted and actual revenues and appropriations June 30 Balances: 10-301 Estimated Revenues Dr. 50,000,000 10-302 Revenues Cr. 55,000,000 10-303 Budgeted Fund Balance Dr. 100,000 10-601 Appropriations Cr. 50,100,000 10-602 Expenditures Dr. 48,000,000 10-603 Encumbrances Dr. 5,000
Year End Entries (Cont’d) • General Fund (Cont’d) • Example 1 – To close budgeted revenues and appropriations (Cont’d) Dr. 10-302 Revenues $55,000,000 Cr. 10-301 Estimated Revenues 50,000,000 Cr. 10-303 Budgeted Fund Balance 100,000 Cr. 10-770 Unreserved Fund Balance 4,900,000 Desc: To close revenues Dr. 10-601 Appropriations $50,100,000 Cr. 10-602 Expenditures 48,000,000 Cr. 10-303 Encumbrances 5,000 Cr. 10-770 Unreserved Fund Balance 2,095,000 Desc: To close appropriations
Year End Entries (Cont’d) • Special Revenue Fund - assumes revenue recorded on a cash basis • Example 1 – To adjust revenues at year end • Expenditures and encumbrances exceeded cash received by $10,000 • Make entries for individual grants • Use 20-141 for State grants and 20-142 for Federal grants Dr. 20-14X Intergovernmental Accounts Rec. $10,000 Cr. 20-302 Revenues 10,000 Desc: To adjust revenues
Year End Entries (Cont’d) • Special Revenue Fund – assumes revenue recorded on a cash basis • Example 2 – To close actual revenues • Cash received exceeded expenditures and encumbrances exceeded by $4,000; carryover is allowed • Make entries for individual grants Dr. 20-302 Revenues $4,000 Cr. 20-481 Deferred Revenue 4,000 Desc: To adjust revenues
Year End Entries (Cont’d) • Special Revenue Fund – assumes revenue recorded on a cash basis • Example 3 – To close actual revenues • Cash received exceeded expenditures and encumbrances exceeded by $3,500; carryover is NOT allowed • Make entries for individual grants • Use 20-411 for State grants and 20-412 for Federal grants Dr. 20-302 Revenues $3,500 Cr. 20-41X Intergovernmental Accounts Payable 3,500 Desc: To adjust revenues
Year End Entries (Cont’d) • Special Revenue Fund • Example 4 – To close actual and actual revenues and appropriations • After making the previous entries, the revenue and expenditures should be equal Dr. 20-601 Appropriations $4,100,000 Cr. 20-301 Estimated Revenues 4,100,000 Desc: To close budgeted revenues and appropriations Dr. 20-302 Revenues $4,100,000 Cr. 20-602 Expenditures 4,100,000 Desc: To close actual revenues and expenditures
