Accounting for Capital Reserve Funds for Capital Construction
Dr. A250 Taxes Receivable $10,000,000
Cr. A980 Revenues $9,500,000
Cr. A 878 Capital Reserve $ 500,000
To record issuance of tax warrant funding of the reserve
Dr. A230 Cash-Special Reserves $500,000
Cr. A250 Taxes Receivable $ 500,000
To record collection of taxes for capital reserve fund
Dr. A511 Appropriated Reserves $500,000
Cr. A960 Appropriations $ 500,000
A9950.9 Transfer to Capital $500,000
To appropriate capital reserve balance for transfer to capital projects fund
Dr. A522 Appropriation Expense $500,000
A9950.9 Transfer to Capital $500,000
Cr. A230 Cash-Special Reserves $500,000
To record transfer of cash to capital projects fund
Dr. A 878 Capital Reserve $500,000
Cr. A909 Fund Balance $500,000
To adjust for use of capital reserve balance to finance capital construction
If the purpose of the reserve fund is the purchase of school buses, the same entries would be used except that the entry transferring cash to the capital projects fund would be unnecessary and the appropriation and expenditure entries would be as follows:
Dr. A511 Appropriated Reserves $500,000
Cr. A960 Appropriations $500,000
A 5510.21 Purchase of Buses $500,000
To appropriate capital reserve balance
Dr. A522 Appropriation Expense $500,000
A5510.21 Purchases of Buses $500,000
Cr. A230 Cash-Special Reserves
To record school bus purchases
In lieu of adjusting fund balance as shown above the expenditure account may closed to A878 Capital Reserve at year end rather than to A909 Fund Balance.