At the beginning of the year,a town adopted a budget based on estimated revenues of $1,800,000 and appropriations of $1,780,000.Because of an emergency late in the year,the town found it necessary to increase the sanitation department appropriation by $8,000.What entry should the town make to record the emergency appropriation?
A)debit estimated revenues;credit appropriations for $8,000
B)debit appropriations;credit budgetary fund balance for $8,000
C)debit budgetary fund balance;credit appropriations for $8,000
D)debit appropriations;credit estimated revenues for $8,000

Question

Quizplus · Accepted Answer

The town should debit the budgetary fund balance (available resources) and credit appropriations for the increased amount of $8,000. This will increase the appropriation for the sanitation department and reflect the change in the budget due to the emergency. Options A and D are incorrect because they do not reflect the actual change in appropriations. Option B is incorrect because it would only be used if the town had previously overestimated the appropriations and had unspent funds.

At the Beginning of the Year,a Town Adopted a Budget