Accounting & Bookkeeping & Small Business Forum

[smilelynn]

I have this question which needs to be finished in 5hours. I wish somebody could help me. I have never done this before, so I would just like to get idea of where I can begin with.

I don't know what adjustments I have to do because the differences between actual and budgeted number seem well explained.

Question:
The Ministry of Business has a total budget for the year of $100 million. There are six lines of business and one external recovery of expenditures. Each business has it's own estimated budget for the year which is calendarized into the system in April for the fiscal year and is used as a yard stick to compare budget to actual throughout the year. At the end of the fiscal year no business should be over their budgeted amount but budget may be transferred between business' during year end. Ministries are required to report their expenses to our office after each month end. The total expenses along with explanations of variances for the Ministry of Business is listed below.
Note the Province of British Columbia uses accrual accounting.

Schedule of Budgeted to Actual Expenses for Ministry of Business
for the Six Months Ending September 30, 2004

Estimated Year to Date YTD Variance YTD
Business Budget Budget Actual Actual to Budget
$ $ $ $
Business A 4,000,000 0 4,000,000 4,000,000
Business B 25,000,000 11,000,000 8,900,000 -2,100,000
Business C 10,000,000 4,000,000 5,000,000 1,000,000
Business D 15,100,000 6,800,000 7,000,000 200,000
Business E 36,000,000 18,000,000 21,000,000 3,000,000
Business F 10,000,000 6,550,000 5,300,000 -1,250,000
External Recovery
of Expenditures -100,000 -50,000 -60,000 -10,000
100,000,000 46,300,000 51,140,000 4,840,000

Explanations:

Business A - $4 million payment was originally planned to be made in December but agreement was changed to be made in September so the calendarized budget is wrong.
Business B - under spent due to the transfer of an employee from Ministry of Finance to Business B and an invoice has been received for $2 million. The budget reallocation for the transfer has not been finalized.
Business C - will be over spent by $1,000,000 at the end of the fiscal year.
Business D - payment for $200,000 made in August was charged to Business D by mistake. Will be transferred to Business F at year end.
Business E - Building Occupancy Charges (BOC) for $3 million are paid on the 1st day of the month but October BOC were paid on September 15.
Business F - will be under budget by 10% at year end.
External Recovery of Expenditures - received $10,000 from the federal government for a cost sharing program that is due in October.

Part A
The above spreadsheet is what Ministry of Business has sent to you. At the end of each month there are two days that ministries may make adjusting entries. When reviewing their explanations you feal some accounting adjustments should be made. Review their spreadsheet and explanations and write a note to the ministry informing them of the adjustments you think they should be making in the system and why? Also request clarification of their explanations where required. Request that the ministry reply to you if they agree with your suggested adjustments.