Accounting Entries

An Overview of Basic Year End and Accrual Entries 1

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

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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

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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

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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

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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 balance6

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

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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. 50,000,00010-302 Revenues Cr. 55,000,00010-303 Budgeted Fund Balance Dr. 100,00010-601 Appropriations Cr. 50,100,00010-602 Expenditures Dr. 48,000,00010-603 Encumbrances Dr. 5,000

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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 appropriations9

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

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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

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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

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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 13