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Reverse for Water Department Obligations $15,000.00

To Water Department Expenses $15,000.00

Payment of claims against the Water Department is recorded
as in the following entry :

Water Department Expenses $25,000.00

To Water Department Cash $25,000.00

70. At the close of the fiscal period the debit halance of the
account called Water Department Expenses is charged to' an
account called Water Department Fund, and the same account
is credited with the credit balance of the account called Water
Department Revenues in the following manner :

Water Department Fund $ 30,000.00

To *Water Department Expenses $ 30,000.00

Water Revenues 100,900.00

To Water Department Fund 100,900.00

The entries last described will close the revenue accounts
(rents and other revenues) and bring together the revenues and
expenses so as to show the profit or loss during the fiscal period.

If the charter makes water rents a lien on the property of the
consumer and provides for the sale of the property as in the



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38 MUNICIPAL ACCOUNTING §39

case of delinquent taws, the debit balance in the account Water
Rents Receivable is transferred to the Tax Sale account by an
entry as follows :

Tax Sale (year) $25,000.00

To ♦Water Rents Receivable $25,000.00

71. Comments on tlie Foregoing Entries. — ^The
account called Water Rents Receivable corresponds to the
account called Taxes Receivable, except that one refers to
water rents and the other to taxes, and is developed according
to the same rules. At the close of the fiscal year the debit bal-
ance shows the amount of water rents uncollected.

Water Rents Receivable is a controlling account and its bal-
ance should correspond with the aggregate of the unpaid items
on the Water Rent Roll.

72. The account called Water Revenues is credited with
water rents charged to consumers as shown by the Water Rent
Roll and with the receipt of other water revenues. It is debited
with amounts refunded on account of water revenues, other
than water rents which are debited to Water Rents Receivable.

At the close of the fiscal year the Water Revenues account
shows the net amount of Water Department revenues and is
closed into Water Department Fund.

73. The accounts called Water Department Cash, Water
Department Expenses, and Reserve for Water Department
Obligations, correspond to similar accounts recording curreiit
transactions, as already described, and which are called Current
Cash, Current Appropriations, and Reserve for Current Obliga-
tions, and are developed along similar lines.

74. The account called Water Department Fund is
intended to reflect concisely the operations of the department
for a fiscal period, and will disclose either a surplus or a deficit.
At the close of the fiscal year this account is debited with the
amount of the debit balance in the account called Water Depart-
ment Expenses and is credited with the amount of the credit
balance in the account called Water Revenues. A credit bal-



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[39



MUNICIPAL ACCOUNTING



39



ance in the Water Department Fund shows a surplus of the
Water Department and a debit balance reflects a deficiency.

75. Trial Balance. — ^A Trial Balance of the accounts of
the Water Department is shown herewith.

Trial Balance — Water Accounts





Total of Entries


Balances




Debits


Credits


Debits


Credits


Water Rents Receiv-
able


$100,150.00
101.000.00

76,000.00

45,000.00

15,000.00

30,000.00
25,000.00


$100,000.00
101,000.00

25,250.00

45,000.00

20,000.00

100,900.00


$ 150.00
50,750.00

25,000.00




Water Revenues

Water Department
Cash




Water Department Ex-
penses




Reserve for Water De-
partment Obligations

Water Department
Fund


$ 5,000.00
70.900.00


Tax Sales








Totals


$392,150.00


$392,150.00


$75,900.00


$75,900.00







BNTRIBS DEALING HVITH THE2 COLLECTION AND RBTURN OF
STATE AND COUNTY TAXES

76. In some cities the treasurer is the collector of state
and county taxes levied by a county board and for the payment
of which no provision is made in the city budget. Upon cer-
tification to the city authorities of the amount required, the
information is entered upon the comptroller's books by an entry
as follows :



Taxes Receivable — County

To Due County Treasurer



$50,000.00



$50,000.00



Collections of state and county taxes reported to the comp-
troller by the city treasurer are recorded as follows :



Current Cash

To Taxes Receivable — County

1 1 T 234—18



$40,000.00



$40,000.00



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40 MUNICIPAL ACCOUNTING § 39

Payments made to the county treasurer are recorded as
follows :

Due County Treasurer $40,000.00

To Current Cash $40,000.00

After the expiration of a period named in the charter, many
cities are required to return to the county treasurer a list of
unpaid state and county taxes, whereupon the city is dis-
charged from further liability, and subsequent proceedings are
conducted by the county officers.

Upon making the return to the county treasurer the trans-
action is recorded by an entry as follows :

Due County Treasurer $10,000.00

To Taxes Receivable— County $10,000.00

77. Comments on the Foregoing Entries. — The

account called Taxes Receivable — County is similar to the
account known as Taxes Receivable previously described,
except that it records the receipt and disbursement of taxes
belonging to the state and county and not to the city.

This account is debited with the total of the county tax roll
and with refunds of erroneous or excessive payments, and is
credited with county taxes collected and with the amount of
unpaid tax^s returned to the county treasurer.

Until balanced by the return to the county treasurer, the
debit balance in this account shows the amount of uncollected
state and county taxes.

78. The account called Due to Counfy Treasurer is
credited with the amount of state and county taxes debited to
Taxes Receivable — County. It is debited with payments to the
county treasurer on account of state and county taxes, with
the amount of state and county taxes cancelled, and with the
amount returned to the county treasurer as unpaid. Unless
and until balanced by return to county treasurer, the account
shows the amount due the county treasurer corresponding to
the balance in the account called Taxes Receivable — County.

If instead of returning the unpaid county taxes to the county
treasurer, the city assumes them and pays the county treasurer



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§ 39 MUNICIPAL ACCOUNTING 41

the amount of the tax warrant in full, this entry will be credited
to Current Cash. The asset of Taxes Receivable — County will
then be the property of the city without any offsetting liability,
and the account will be developed as are other tax receivable
accounts, depending on the tax procedure of the city.



ASSESSMENT ACCOUNTS

79. Assessment accounts are those which record the
transactions of the city that relate to assessment work and the
levy and collection of assessments, including the financing of
the cost of the work and of uncollected assessments.

An assessment is defined as the adjustment of the shares
of a group of contributors toward a common beneficial object
according to the benefits received.

The charters of municipalities outline various plans for

authorizing, making, and financing assessable improvements.

Notwithstanding the variation of details, it will be found that

the general principles of this group of accounts may be made

, applicable with such variations as local conditions require.

As in the case of the accounts in the other groups, the con-
trolling accounts, where required, are in the General Ledger,
with subsidiary records in the ledger referred to as Ledger B
in connection with the current group of accounts.

80. Entries in Assessment Accounts. — Charters of
some municipalities provide for the authorization of assessable
work without any definite statement of the cost or any appro-
priation therefor. The work is completed, and the cost defi-
nitely ascertained before an assessment is levied. In the levy
of the assessment there is added to the direct cost a percentage
for engineering expenses, which include the salaries and mis-
cellaneous expenses of the engineering force of the municipal-
ity paid out of current appropriations. The cost of assessment
work is met out of the proceeds of temporary loans, or assess-
ment bonds, which are paid when the assessments are collected.

The following is a list of the accounts in the assessment
group:



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42 MUNICIPAL ACCOUNTING § 3{)

Debits Credits

Assessment Cash Assessment Loans

Local Improvements Assessable Reserve for Assessment Obliga-

Assessments Receivable tions

Assessments Against City Assessment Claims Audited

Due From Current Accounts Assessment Warrants Payable

Assessment Interest on Loans Due to Current Accounts

Assessment Revenues
Assessment Surplus

The following entries exhibit the development of the assess-
ment accounts.



ENTRY RECORDING CONTRACTS BNTERBD INTO OR ORDERS

ISSUBD

81. When contracts are entered into or orders are issued,
entries are made as follows :

Local Improvements Assessable $20,000.00

To Reserve for Assessment Obligations $20,000.00

82. Comments on tlie Foregoing Entries. — The

account known as Local Improvements Assessable is debited
with all advances made and expenses or liabilities incurred on
account of a project the final cost of which is to be the subject
of an assessment, wholly or in part, against the property bene-
fited. This account is credited with all orders and contracts
cancelled or liquidated on the audit of claims, with refunds of
erroneous payments, and with assessments levied. The debit
balance shows the amount of advances, expenses, and obliga-
tions incurred on account of assessable work. This is a con-
trolling account and should t)e supported by a subsidiary ledger
containing an account with each improvement. Proof of the
subsidiary record should be made monthly. In making the final
credit entry, representing the levy of the assessment, the fiscal
officer should see that the amount thereof corresponds pre-
cisely with the cost of the work, as shown by the account in
the subsidiary ledger. Any discrepancy should be adjusted.

83. The account called Reserve for Assessment Obliga-
tions is debited with the reserves to be cancelled on the liquida-
tion of orders or contracts when claims are audited for local
improvements or assessable work in progress, and with orders



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§ 39 MUNICIPAL ACCOUNTING 43

and contracts cancelled. It is credited with the amount
reserved on account of the contingent obligation and commit-
ments represented by orders and contracts. The credit bal-
ance of the account shows the amount of outstanding orders
and contracts relating to assessable work.



KNTRIBS RECORDING CLAIMS AUDITED FOR PAYMESNT

84. An entry in the following form is made for amount
reserved on the order or contract :

Reserve for Assessment Obligations $20,000.00

To *Local Improvements Assessable $20,000.00

For amount of claims audited, the entry is as follows :

♦Local Improvements Assessable $22,000.00

To Assessment Claims Audited • $22,000.00

85. Comments on tlie Foregoing Entries. — The

accounts called Reserve for Assessment Obligations and Local
Improvements Assessable are described in the preceding
articles.

The account called Assessment Claims Audited is debited
with warrants drawn in payment of audited claims and
credited with the amount of claims audited which are charge-
able to any account in the assessment group The credit bal-
ance shows the amount of claims audited which remain unpaid.

The remarks in Arts. 28 and 29 concerning claims audited
and warrants payable apply also to assessment claims.



ENTRIES ON THE LEVY OF AN ASSESSMENT

86. In connection with the levy of an assessment, entries
are made as follows :

♦Assessments Receivable $16,000.00

Assessments Against the City 8,000.00

To ♦Local Improvements Assessable $22,000.00

Due to Current Accounts 2,000.00

87. Comments on tlie Foregoing: Entries. — The

accounts Assessments Receivable and Assessments Against the
City are debited with the amount of assessments levied and



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U MUNICIPAL ACCOUNTING §39

with the amount of refunds of erroneous or excessive payments.
The accounts are credited with assessments collected, cancelled,
or reduced, and with assessments transferred to tax roll or
Tax Sale account. The debit balance shows the amount of
uncollected assessments.

The account Assessments Receivable is a controlling account
and should be supported by a subsidiary record containing
accounts with each individual assessment. The aggregate of
the balances of the accounts in the subsidiary ledger should
correspond with the balance of the controlling account, and
proof of this fact should be made monthly. The balance of
each subsidiary Assessments Receivable account should, in
turn, agree with the aggregate of the open and unpaid items on
the assessment roll. This, too, should be proved periodically.

88. The account called Due to Current Accounts is debited
with payments to current accounts on liquidation of sums due
to that group of accounts. It is credited with cash
received from current accounts to finance assessable work,
with advances for assessable work made " out of current
accounts, and with engineering charges met out of current
accounts included in an assessment levy. The credit balance
shows the amount due to the current accounts.

A collateral entry in the current accounts will be required as
follows :

Due from Assessment Accounts $2,000.00

To Current Revenues—Unestimated $2,000.00

or
Current Revenues — Estimated



BNTRIBS FOR ASSKSSMBNTS COIXECTBD

89. When assessments are collected, entries are made as
follows :

Assessment Cash $6,500.00

To ♦Assessments Receivable $6,000.00

Assessment Revenues ^00.00

(For interest and penahies)

90. Comments on tlie Foregoing: Entries. — In the

assessment group, the cash account is called Assessment Cash



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§ 39 MUNICIPAL ACCOUNTING 45

and is so segregated to prevent its expenditure for other than
assessment purposes.

The account called Assessments Receivable is described in
Art. 87.

The account called Assessment Revenues is debited with
assessment revenues refunded and credited with revenues which
are applied to assessment purposes. The credit balance reflects
the net revenues accrued or received, and, at the end of the year,
should be closed into Assessment Surplus account. The par-
ticular revenues which are to go to this account depend on the
financial plan in each city. In some cities all interest and
penalties on assessments are taken into the current revenues,
in which case there will be no account for assessment revenues.
In others, these earnings are used to offset the interest bn
assessment loans for which no provision is made in the budget.
In that case, this account will be necessary.

At the end of the year the balance of the Assessment
Revenues account, together with that of the Assessment Inter-
est on Loans account should be closed into the Assessment
Surplus account, thus indicating whether these revenues were,
in fact, sufficient to meet the interest on loans.



ENTRIES FOB MONET BOBBOWED IN ANTICIPATION OF THE

COLLECTION OF ASSESSMENTS OB TO PBOVIDE A FUND

FOB ASSESSABLE WOBK IN PBOOBESS

91. When money is borrowed in anticipation of the collec-
tion of assessments or to provide funds for assessable work in
progress, entries are made as follows :

Assessment Cash $10,000.00

To Assessment Loans $10,000.00

92. Comments on tlie FoTegoing Entries. — The

account called Assessment Cash is described in Art. 90.

The account called Assessment Loans is debited with assess-
ment loans paid, and credited with moneys borrowed in antici-
pation of the collection of assessments, and for loans to finance
assessable work, which are to be paid from the collection of
assessments to be levied.



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46 MUNICIPAL ACCOUNTING §39

The credit balance shows the amount of unpaid loans. This
account is intended only for those loans which are made to
finance assessment work or uncollected assessments. So-called
assessment bonds, or local improvement bonds, which are issued
for the city's share of assessments and which are to be
redeemed wholly by subsequent taxation should go In the
account for Capital Loans and not here.



BNTRIBS TO RECORD PAYMENT BY CITY OF ITS SHARES OF
AN ASSESSMBNT

93. The record of the payment of the city's share of an
assessment is made as follows :

Assessment Cash $8,000.00

To Assessments Against City $8,000.00

94. Comment on the Foregoing Entries. — ; The

account called Assessment Cash is described in Art. 90.

The account called Assessments Against City is described in
Art. 87.



KNTRIBS FOR ASSfiSSMfiNT LOANS TO BK PAID

95. Assessment loans to be paid are entered in the follow-
ing manner :

Assessment Loans $5,000.00

To Assessment Claims Audited $5,000.00

96. Comment on the Foregoing: Entries. — The

account called Assessment Loans is described in Art. 92.

The account called Assessment Claims Audited is described
in Art. 85.



KNTRIBS FOR INTEREST ON ASSESSMENT LOANS TO BE PAID

97. The interest on Assessment Loans requires entries as
follows :

Assessment Interest on Loans $150.00

To Assessment Claims Audited $150.00

98. Comments on the Foregroing Entries. — The

account called Assessment Interest on Loans is debited with
interest paid on assessment loans in municipalities that do not



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§39 MUNICIPAL ACCOUNTING 47

make provisions therefor in the annual budget and is credited
at the end of the year by transferring the debit balance to
Assessment Surplus account. Assessment Interest on Loans
account is not required in cities that make provisions, for inter-
est on these loans in the annual budget. The procedure in
such case has been explained in Art. 90.

The account called Assessment Claims Audited is described
in Art. 85.

BNTRIBS FOR PAYMENT TO CURRENT ACCOUNTS

99. Payment to current accounts requires entries as fol-
lows:

Due to Current Accounts $2,000.00

To Assessment Claims Audited $2,000.00

A collateral entry in current accounts will be required, as

follows :

Current Cash

To Due from Assessment Accounts

100. Cominent on the Foregoing Entries. — The

account called Due to Current Accounts is described in Art. 88.
The account called Assessment Claims Audited is described
in Art. 85.



KNTRIBS FOR IVARRANTS ISSUESD IN PAYMBNT OF CliAIMS

101. When warrants are issued in payment of claims, the
following entries are required :

Assessment Claims Audited $20,000.00

To Assessment Warrants Payable $20,000.00

102. Comment on the Foregoing Entries. — ^Assess-
ment Claims Audited account is described in Art. 85.

The account called Assessment Warrants Payable is debited
with the payments of assessment warrants and credited with
assessment warrants issued; that is, with all warrants which
are chargeable to any account in the assessment accounts
group. A credit balance shows the amount of unpaid warrants.
(See also Arts. 28 and 29 Concerning claims audited and war-
rants payable accounts.)



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48 MUNICIPAL ACCOUNTING § 39

ESNTRIBS TO RECORD PAYMENT OP M^ARRANTS

103. The payment of warrants requires entries as follows :

Assessment Warrants Payable $18,000.00

To Assessment Cash $18,000.00

104, Comment on tlie Foregoing Entries. — The

account called Assessment Warrants Payable is described in
Art. 102.

The account called Assessment Cash is described in Art. 90.



ENTRIES FOR UNCOLLECTED ASSESSMENTS

105. In municipalities where sales are authorized for
assessment arrears, uncollected assessments, including penal-
ties, are transferred to a Tax Sale account by entries as fol-
lows : (See Arts. 60 and 62 in current accounts.)

Due from Current Accounts $10,500.00

To ♦Assessments Receivable $10,000.00

Assessment Revenues 500.00

(For interest and penalties)

Assessment Surplus 150.00

To Assessment Interest on Loans 150.00

106. Comment on tlie Foregoing Entries. — The

account called Due from Current Accounts is debited with
unpaid assessments transferred to Tax Sale account and cred-
ited with receipts from current accounts to liquidate charges
against that group of accounts. A debit balance shows the
amount due from current accounts.

The account called Assessments Receivable is described in
Art. 87.

The account called Assessment Revenues is described in
Art. 90.

The account called Assessment Surplus (or deficit) is deb-
ited with surplus transferred to current accounts ; and at the
end of the year it is debited with the debit balance of Assess-
ment Interest on Loans account. It is credited with appro-
priations in the budget to apply on the deficit ; and at the end of



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§39



MUNICIPAL ACCOUNTING



49



year it is credited with the credit balance of Assessment Rev-
enues account. A debit balance reflects a deficit ; a credit bal-
ance reflects a surplus in the assessment group of accounts.



CLOSING BNTRIBS AT BND OF YEAR

107. At the end of the year the assessment accounts are
closed as follows :



♦Assessment Revenue

To Assessment Surplus



$1,000.00



$1,000.00



The following is a trial balance of the assessment accounts
after the above entries are made :

Trial Balance — ^Assessment accounts





ToUls of Entries


Balances




Debits


Credits


Debits


Credits


Assessment Cash

Local Improvements
Assessable


$ 24,500.00

42,000.00
16,000.00

8,000.00

10,500.00

150.00
5,000.00

20,000.00

20,000.00

^8,000.00

2,000.00

1,000.00

150.00


$ 18,000.00

42,000.00
16,000.00

8,000.00

150.00
10,000.00

20,000.00

29,150.00

20,000.00

2,000.00
1,000.00
1,000.00


$ 6,500.00
10,500.00


'


Assessments Receivable

Assessments Against

City




Due From Current Ac-
cotmts




Assessment Interest on
Loans

Assessment Loans

Reserve for Assessment
Obligations


$ 5,000.00


Assessment Claims
Audited


9,150.00
2,000.00


Assessment Warrants
Payable


Due to Current Ac-
counts




Assessment Revenues. .
Assessment Surplus ....


850.00


Totals


$167,300.00


$167,300.00


$17,000.00


$17,000.00







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50 MUNICIPAL ACCOUNTING § 39



CAPITAL AND SINKING FUND ACCOUNTS

108. It is believed that any system of municipal accounts
is incomplete which does not include a record of the assets of
the city as well as of its liabilities. Although public improve-
ments are sometimes financed by means of taxes, that plan is
unfair and inequitable, in that it imposes on the taxpayer of
today the cost of a construction which will be enjoyed by
future taxpayers, and hence the desirability of financing such
work by long-term bonds.

The following is a list of the accounts in the Capital Group,
these accounts being subdivided into Capital Section and Sink-
ing Fund Section :

Capital Section
Debits Credits

Capital Cash Capital Appropriations

Authorized Construction Reserve for Capital Obligations

City Properties " Capital Claims Audited

Capital Warrants Payable
Premium on Bonds
Capital Loans
Capital Surpuls

Sinking Fund Section
Sinking Fund Cash Sinking Fund Revenues

Sinking Fund Investments Sinking Fund

Taxes Receivable — ^Arrears Tax Arrears Sinking Fund

Pledged to Sinking Fund
Sinking Fund Payments

BNTRIBS IN CAPITAli GROUP (CAPITAL SE3CTION)

109. When books are opened in a city that greviously has
kept no record of its city property, an inventory or list of such
property will be prepared, in which a valuation is placed
on the property as appraised or as it appears on the assess-
ment rolls.

The following entry includes information indicating that
upon opening the accounts construction of a capital improve-
ment was in progress and that the authorization remains unem-
cumbered to the amount of $15,000.00.



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§ 39 MUNICIPAL ACCOUNTING 51

Capital Cash ' $ 20,000.00

*City Properties 400,000.00

Authorized Construction 15,000.00

To *Capital Appropriations $ 15,000.00

♦Capital Loans 250,000.00

Capital Surplus 170,000.00

110. Upon the decision of the proper board to make fur-



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