A city government adopts a budget for its General Fund. Estimated revenues are $10,000,000 and appropriations are $9,800,000. Which of the following is the correct journal entry to record the budget?

Answer options:

Debit Estimated Revenues $10m; Credit Appropriations $9.8m; Credit Revenues $0.2m

Debit Estimated Revenues $10m; Credit Appropriations $9.8m; Credit Budgetary Fund Balance $0.2m

Debit Appropriations $9.8m; Debit Budgetary Fund Balance $0.2m; Credit Estimated Revenues $10m

Debit Estimated Revenues $10m; Credit Appropriations $10m

How to approach this question

Budget Entry: Debit Estimated Revenues (what we hope to get). Credit Appropriations (what we are allowed to spend). Plug Budgetary Fund Balance.

Full Answer

B.Debit Estimated Revenues $10m; Credit Appropriations $9.8m; Credit Budgetary Fund Balance $0.2m✓ Correct

To record the budget: Debit Estimated Revenues $10,000,000. Credit Appropriations $9,800,000. The difference ($200,000 surplus) is Credited to Budgetary Fund Balance.

Common mistakes

Reversing debits/credits; using 'Revenues' or 'Fund Balance' instead of budgetary accounts.

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