2.2.4.7.17

Merchandise Inventories in Proprietary Fund Type Accounts—Periodic Inventory Method

Effective Date:

Sept. 1, 1998

2.2.4.7.17.a

To record the acquisition of merchandise inventories as an expense. (Refer to Section 2.2.4.4.3.a(1).)

Dr.

Cr.

Cost of Goods Sold (6516) Object F

xxx

Cash in Bank (1110) or
In-Process (71XX or
Payables (51XX)

xxx

2.2.4.7.17.b

To record the sale of merchandise inventories when the merchandise inventory purchase is recorded as an expense. (Refer to Section 2.2.4.4.3.a(2).)

Dr.

Cr.

Cash in Bank (1110) or
In-Process (71XX) or
Receivables (13XX)

xxx

Cash Revenue (3210) or
Accrued Revenues (3205) Revenue Source Code (0405 or 0455) Sales

xxx

2.2.4.7.17.c

To record the adjustment for merchandise inventory when the physical count shows the inventory value greater than the amount in the general ledger control account GL Code 1420 "Merchandise Inventories." This entry is reversed when the physical count shown the inventory value less than the recorded amount. (Refer to Sections 2.2.4.4.3.a(3) and .b(3).)

Dr.

Cr.

Merchandise Inventories (1420)

xxx

Cost of Goods Sold (6516) Object F

xxx

2.2.4.7.18

Merchandise Inventories in Proprietary Fund Type Accounts—Perpetual Inventory Method

Effective Date:

Sept. 1, 1998

2.2.4.7.18.a

To record the acquisition of merchandise inventories as an asset. (Refer to Section 2.2.4.4.3.b(1).)

Dr.

Cr.

Merchandise Inventories (1420)

xxx

Cash in Bank (1110) or
In-Process (71XX) or Payables (51XX)

xxx

2.2.4.7.18.b

To record the sale of merchandise inventories when the merchandise inventory purchase is recorded as an asset. (Refer to Section 2.2.4.4.3.b(2).)

The second entry is to adjust the merchandise inventory account and record the cost of goods sold:

Dr.

Cr.

Cash in Bank (1110) or
In-Process (71XX) or
Receivables (13XX)

xxx

Cash Revenues (3210) or
Accrued Revenues (3205) Revenue Source Code (0450 or 0455) Sales

xxx

Cost of Goods Sold (6516) Object F

xxx

Merchandise Inventories (1420)

xxx

2.2.4.7.19

Donations of Consumable Inventories

Effective Date:

Sept. 1, 1998

A common example of donated consumable inventory is federal surplus food commodities provided to the state for use in a variety of programs. This example assumes that commodities with a fair market value of $5,000 are donated to the state for use in a governmental fund type account. The state pays $500 shipping costs for delivery of the commodities.

2.2.4.7.19.a

To record the acquisition of donated consumable inventories. (Refer to Section 2.2.4.4.4.a.)

Dr.

Cr.

Consumable Inventories (1410)

Donated Inventories (1415)

500

5,000

Cash in Bank (1110) or
Warrants In-Process (7120)

Revenue Adjustments/Eliminations (GAAP) (3225) Revenue Source Code (0310) Dept. of Agriculture

500

5,000

2.2.4.7.19.b

To record the use of donated consumable inventories with a fair market value of $4,000. Use of donated consumable inventories is treated as a nonbudgeted activity. The cash outlay for shipping costs is a budgeted expenditure. (Refer to Section 2.2.4.4.4.b.)

Dr.

Cr.

Expense Adjustments/Eliminations (GAAP) (6525) Object E

Cash Expenditures/Expenses (6510) Object E

4,000

400

Consumable Inventories (1410)

Donated Inventories (1415)

400

4,000

2.2.4.7.19.c

To record year-end adjustment. (Refer to Section 2.2.4.4.4.c.)

Note: The second entry is required in governmental and expendable trust fund type accounts only.

Dr.

Cr.

Revenue Adjustments/Eliminations (GAAP) Revenue Source (0310) Dept. of Agriculture

1,000

Deferred Revenues (5192)

1,000

Unreserved/Undesignated Fund Balance (9590)

100

Reserved for Consumable Inventories (9540)

100

2.2.4.7.20

Food Stamp Inventories

Effective Date:

Sept. 1, 1998

Food stamps are received from the U.S. Department of Agriculture for distribution to eligible clients of the Department of Social and Health Services. This example assumes that food stamps with a face value of $5,000 are received by the department for use in the General Fund Basic Account, a governmental fund type.

2.2.4.7.20.a

To record the receipt of food stamp inventories. (Refer to Section 2.2.4.4.5.a.)

Dr.

Cr.

Food Stamp Inventory (1470)

5,000

Revenue Adjustments/Eliminations (GAAP) (3225) Revenue Source Code (0310) Dept. of Agriculture

5,000

2.2.4.7.20.b

To record the distribution of food stamps with a face value of $4,000. The face value of food stamps distributed is treated as a non-budgeted activity. (Refer to Section 2.2.4.4.5.b.)

Dr.

Cr.

Expenditure Adjustments/Eliminations (GAAP) (6525) Object N

4,000

Food Stamp Inventory (1470)

4,000

2.2.4.7.20.c

To record year-end adjustment. (Refer to Section 2.2.4.4.5.c.)

Dr.

Cr.

Revenue Adjustments/Eliminations (GAAP) (3225) Revenue Source Code (0310) Dept. of Agriculture

1,000

Deferred Revenues (5192)

1,000

2.2.4.7.21

Prepaid Expenses

Effective Date:

Sept. 1, 1998

2.2.4.7.21.a

To record the prepayment of goods and services, other than inventory, in proprietary and similar trust fund type accounts. (Refer to Section 2.2.4.5.1.b.)

Dr.

Cr.

Prepaid Expenses (1510)

xxx

Cash in Bank (1110) or
Warrants In-Process (7120) or
Journal Vouchers In-Process (7140)

xxx

2.2.4.7.21.b

To record the portion of prepaid goods and services used during the period. (Refer to Section 2.2.4.5.1.c.)

Dr.

Cr.

Cash Expenditures/Expenses (6510) (with appropriate subobject)

xxx

Prepaid Expenses (1510)

xxx

2.2.4.7.22

Acquisition of Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.7.22.a

The entry for the acquisition of a capitalized fixed asset (unit cost of $5,000 or more) records the expenditure in the account acquiring the asset with a corresponding entry in Account 997 "General Fixed Asset Account Group." (Refer to Section 2.2.4.6.3.a(1).)

Operating Account:

Dr.

Cr.

Cash Expenditures/Expenses (6510) Object J

xxx

Cash in Bank (1110) or Warrants In-Process (7120)

xxx

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Land (2110)

Buildings (2210)

Improvements Other Than Buildings (2310)

Furnishings and Equipment (2410)

xxx

xxx

xxx

xxx

Investment in General Fixed Assets (98XX)

xxx

2.2.4.7.22.b

The entry to record the acquisition of a capitalized fixed asset (unit cots of $5,000 or more) is made in the appropriate fixed asset GL Code in the account acquiring the asset. (Refer to Section 2.2.4.6.3.a(2).)

Operating Account:

Dr.

Cr.

Land (2110)

Buildings (2210)

Improvements Other Than Buildings (2310)

Furnishings and Equipment (2410)

xxx

xxx

xxx

xxx

Cash in Bank (1110) or Warrants In-Process (7120)

xxx

The following additional entry is required for budgeted proprietary fund type accounts for fixed asset acquisitions .

Dr.

Cr.

Cash Expenditures/Expenses (6510) Object J

xxx

Expense Adjustments/Eliminations (GAAP) (6525) Object J

xxx

The following entry records the donation of a piece of equipment to a proprietary fund type account.

Dr.

Cr.

Furnishings and Equipment (2410)

xxx

Contributed Capital (9300)

xxx

2.2.4.7.23

Non-Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

The entry for the acquisition of a non-capitalized fixed asset (unit cost under $5,000) records the expenditure/expense in the account acquiring the asset. (Refer to Section 2.2.4.6.3.b.)

Dr.

Cr.

Cash Expenditures/Expenses (6510) (Subobject JA)

xxx

Cash in Bank (1110) or Warrants In-Process (7120)

xxx

2.2.4.7.24

Depreciation

Effective Date:

Sept. 1, 1998

2.2.4.7.24.a

The following entry records the allowance for depreciation on general fixed assets in Account 997 "General Fixed Assets Account Group." (Refer to Section 2.2.4.6.4.a.)

Dr.

Cr.

Investment in General Fixed Assets (98XX)

xxx

Allowance for Depreciation – Buildings (2220)

Allowance for Depreciation – Improvements Other Than Buildings (2320)

Allowance for Depreciation – Furnishings and Equipment (2420)

xxx

xxx

xxx

2.2.4.7.24.b

The following entry records the depreciation of fixed assets in proprietary and similar trust fund type accounts. (Refer to Section 2.2.4.6.4.b.)

Dr.

Cr.

Depreciation Expense (6511) (Subobject WA)

xxx

Allowance for Depreciation – Buildings (2220)

Allowance for Depreciation – Improvements Other Than Buildings (2320)

Allowance for Depreciation – Furnishings and Equipment (2420)

xxx

xxx

xxx

2.2.4.7.25

Disposal of Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.7.25.a

The net proceeds received from the sale of general fixed assets are generally recorded in the account which originally acquired the asset. (Refer to Section 2.2.4.6.5.a.) If the estimated net proceeds from disposition were included in the budget for replacement fixed assets acquisition and the expenditure for the acquisition of new fixed assets has already been recorded at gross, the following entry is made:

Dr.

Cr.

Cash in Bank (1110) or
Receipts In-Process (7110) or
Journal Vouchers In-Process (7140)

xxx

Cash Expenditures/Expenses (6510) Object J

xxx

If the net proceeds from disposition were not included in the budget for new fixed assets acquisition, the following entry is to be made instead:

Dr.

Cr.

Cash in Bank (1110) or
Receipts In-Process (7110) or
Journal Vouchers In-Process (7140)

xxx

Cash Revenues (3210) Revenue Source Code (0416) Sale of Property - Other

xxx

In addition, an entry in Account 997 "General Fixed Assets Account Group" is made to record the removal of the fixed asset.

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Investments in General Fixed Assets (98XX)

Allowance for Depreciation Furnishings and Equipment (2420)

xxx

xxx

Furnishings and Equipment (2410)

xxx

2.2.4.7.25.b

The disposal of fixed assets of proprietary and similar trust fund type accounts are accounted for in the account which recorded the asset. (Refer to Section 2.2.4.6.5.b.)

Dr.

Cr.

Cash in Bank (1110) or
Receipts In-Process (7110) or
Journal Vouchers In-Process (7140)

Allowance for Depreciation Furnishings and Equipment (2420)

xxx

xxx

Furnishings and Equipment (2410)

Gain and Loss on Sale of Capitalized Fixed Assets (3213) Revenue Source Code (0418) Gain or Loss on Sale of Fixed Assets

xxx

xxx

The following additional entry is needed to record the net proceeds received upon disposition of a fixed asset in budgeted proprietary and similar trust fund type accounts.

If the net proceeds from disposition were included in the budget for replacement fixed asset acquisition and the purchase for the new fixed assets has already been recorded at gross, the following entry is made:

Dr.

Cr.

Expense Adjustments/Eliminations (GAAP) (6525) Object J

xxx

Cash Expenditures/Expenses (6510) Object J

xxx

If the net proceeds from disposition were included in the budget as estimated revenues, the following entry is made:

Dr.

Cr.

Revenue Adjustments/Eliminations (GAAP) (3225) Revenue Source Code (0416) Sale of Property - Other

xxx

Cash Revenues (3210) Revenue Source Code (0416) Sale of Property - Other

xxx

The following entry reflects the sale of a donated piece of equipment which was recorded at the time of donation at its fair value of $10,000 and has associated accumulated depreciation at the time of sale of $7,000. Sale proceeds are $1,500.

Dr.

Cr.

Contributed Capital (9300)

10,000

Furnishings and Equipment (2410)

10,000

Cash in Bank (1110) or
Receipts In-Process (7110)

Allowance for Depreciation – Furnishings and Equipment (2420)

1,500

7,000

Gain and Loss on Sales of Capitalized Fixed Assets (3213) Revenue Source Code (0418) Gain/Loss on Sale of Fixed Assets

8,500

2.2.4.7.26

Trade-in of Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.7.26

These illustrative entries assume the following: a vehicle is purchased for $12,000 cash. (It has a market value of $14,000 less a trade-in allowance of $2,000.) The trade-in vehicle originally cost $9,000 and has a current book value of $1,500.

2.2.4.7.26.a

These entries reflect the trade-in transaction in the operating account acquiring the vehicle and the corresponding entries in Account 997 "General Fixed Assets Account Group." (Refer to Section 2.2.4.6.5.a.)

Operating Account:

Dr.

Cr.

Cash Expenditures/Expenses (6510) (Subobject J)

12,000

Journal Vouchers In-Process (7140)

12,000

2.2.4.7.26.a

The first entry removes Vehicle Traded-in.

The second entry records new vehicle.

Dr.

Cr.

Investment in General Fixed Assets (98XX)

Accumulated Depreciation – Furnishings and Equipment (2420)

1,500

7,500

Furnishings and Equipment (2410)

9,000

Furnishings and Equipment (2410)

14,000

Investment in General Fixed Assets (98XX)

14,000

2.2.4.7.26.b

This entry reflects a trade-in transaction in a non-budgeted proprietary and similar trust fund type accounts. (Refer to Section 2.2.4.6.5.b.)

Dr.

Cr.

Furnishings and Equipment (2410)

Accumulated Depreciation – Furnishings and Equipment (2420)

13,500

7,500

Furnishings and Equipment (2410)

Cash in Bank (1110)

9,000

12,000

2.2.4.7.27

Fixed Assets Acquired Through Capital Lease

Effective Date:

Sept. 1, 1998

2.2.4.7.27.a

The entry for the acquisition of capitalized leased assets records the expenditure in the account acquiring the leased assets with a corresponding entry in Account 997 "General Fixed Assets Account Group." (Refer to Section 2.2.4.6.7.a.)

Operating Account:

Dr.

Cr.

Fixed Assets Acquisitions by Lease/Installment Purchase (6514) Object J

xxx

Noncash Other Financing Sources (3221) Revenue Source Code (0709) Noncash Capital Lease Acquisition

xxx

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Furnishings and Equipment (2410)

xxx

Investment in General Fixed Assets (98XX)

xxx

The entry to record lease acquisitions which meet the capital lease criteria, but DO NOT meet the $10,000 capitalization requirement is as follows. For acquisition of a non-capitalized leased asset, no entry is made in Account 997 "General Fixed Assets Account Group" until title transfers.

Dr.

Cr.

Cash Expenditures/Expenses (6510) (Subobject ED or other subobject as appropriate)

xxx

Cash in Bank (1110) or Warrants In-Process (7120)

xxx

To record subsequent acquisition of non-capitalized leased assets in Account 997 "General Fixed Assets Account Group" upon transfer of the title. The asset is recorded at the fair market value at the time title transfers.

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Furnishings and Equipment (2410)

xxx

Investment in General Fixed Assets (98XX)

xxx

2.2.4.7.27.b

Proprietary and Similar Trust Fund Type Accounts.

To record capitalized leased assets acquired by proprietary and similar trust fund type accounts in the account acquiring the leased assets. (Refer to Section 2.2.4.6.7.b.)

Dr.

Cr.

Furnishings and Equipment (2410)

xxx

Lease Purchase Agreements Payable - Short-Term (5172)

Lease Purchase Agreements Payable - Long-Term (5272)

xxx

xxx

The following entry records lease acquisitions which meet the capital lease criteria but DO NOT meet the $10,000 capitalization requirement.

Dr.

Cr.

Cash Expenditures/Expenses (6510) (Subobject ED or other subobject as appropriate

xxx

Cash in Bank (1110) or Warrants In-Process (7120)

xxx

To record subsequent acquisition of non-capitalized leased assets.

Dr.

Cr.

Furnishings and Equipment (2410)

xxx

Cash Revenues (3210) Revenue Source Code (0716) Recoveries of Prior Biennium Expenditures

xxx

2.2.4.7.28

Accounting for the Construction of Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.7.28.a

Costs incurred for the construction of fixed assets are to be recorded in the account incurring the expenditure. (Refer to Section 2.2.4.6.9.a.)

Operating Account:

Dr.

Cr.

Cash Expenditures/Expenses (6510) Object J

xxx

Cash in Bank (1110) or
Warrants In-Process (7120) or
Construction Contracts Payable - Short-Term (5117)

xxx

Construction projects not completed at the end of the accounting period require an entry in Account 997 "General Fixed Assets Account Group."

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Construction In Progress (2510)

xxx

Investment in General Fixed Assets (98XX)

xxx

Upon completion of the project, the construction in progress is reclassified to the appropriate fixed asset GL Code(s) in Account 997 "General Fixed Assets Account Group."

General Fixed Assets Account Group (Account 997):

Dr.

Cr.

Buildings (2210)

Improvements Other Than Buildings (2310)

Furnishings and Equipment (2410)

xxx

xxx

xxx

Construction In Progress (2510)

Investment in General Fixed Assets (98XX)

xxx

xxx

2.2.4.7.28.b

In proprietary and similar trust fund type accounts, costs incurred for the construction of fixed assets are to be recorded in the account incurring the expense. (Refer to Section 2.2.4.6.9.b.)

Dr.

Cr.

Construction In Progress (2510)

xxx

Cash in Bank (1110) or
Warrants In-Process (7120) or
Construction Contracts Payable - Short-Term (5117)

xxx

The following additional entry is required for budgeted proprietary fund type accounts where construction costs are appropriated.

Dr.

Cr.

Cash Expenditures/Expenses (6510) Object J

xxx

Expense Adjustments/Eliminations (GAAP) (6525) Object J

xxx

Upon completion of the construction project, the construction in progress is reclassified to the appropriate fixed asset GL code(s) for the total costs capitalized to date.

Dr.

Cr.

Buildings (2210)

Improvements Other Than Buildings (2310)

xxx

xxx

Construction In Progress (2510)

xxx