1. Accounting Entries An Overview of Basic Year End and Accrual Entries 1

2. 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 2

3. 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 3

4. 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 4

5. 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 5

6. 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 balance 6

7. 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 7

8. 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. 50,000,000 10-302 Revenues Cr. 55,000,000 10-303 Budgeted Fund Balance Dr. 100,000 10-601 Appropriations Cr. 50,100,000 10-602 Expenditures Dr. 48,000,000 10-603 Encumbrances Dr. 5,000 8

9. 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 appropriations 9

10. 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 10

11. 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 11

12. 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 12

13. 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