Discussion:
a. A city adopts the general fund budget. The budget estimates that $2,000,000 in property taxes will be received and authorizes spending for operating activities of $1,900,000 and also anticipates $80,000 will be spent during the year to settle an outstanding lawsuit.
Prepare the journal entry to record the budget.
b. The city completes its fiscal year. The city received property tax revenues of $1,900,000, and the remaining balance will not be received until 90days after the fiscal year-end. The city settled the lawsuitefor $75,000. The city sprnt 41,750,000 during the fiscal year and still has $80,000 in encumbrances outstanding. Prepare the entries to close the budgetry accounts (use the info from a. above as needed).