Explore BrainMass

Explore BrainMass

    Freeman Town's General Fund

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The fund equity section of the interim balance sheet of the Freeman Town's General Fund, as of June 30, 2005, was:

    Fund Equity:
    Appropriations $2,551,600
    Less: Expenditures $1,349,000
    Encumbrances 112,000 1,461,000
    Available Appropriations $1,090,600
    Reserve for encumbrances 112,000
    Fund Balance 122,600
    Total Fund Equity $1,325,200

    The fund equity section of the balance sheet for the same fund as of December 31, 2005, the end of the fiscal year, was:

    Fund Equity:
    Reserve for encumbrances $ 32,000
    Reserve for Inventory of Supplies 60,000
    Total Reserved Fund Equity $ 92,000
    Fund Balance 81,600
    Total Fund Equity $ 173,600

    A local newspaper ran a feature article and an editorial on the incompetence of the city administrators in "running the General Fund at a loss of over $1,150,000 in the last six months of 2005," since the Total Fund Equity decreased from $1,325,200 to $173,600.
    Is the newspaper correct? Why or why not? If you need additional information in order to be sure of your answer, explain what additional information you need.

    © BrainMass Inc. brainmass.com March 4, 2021, 7:51 pm ad1c9bdddf

    Solution Preview

    Freeman Town's General Fund 2005 budgetary and operating statement accounts were closed before the December 31 balance sheet could be prepared. Therefore, the $173,600 is the excess of General Fund ...

    Solution Summary

    Describes the fund equity section of the interim balance sheet.