**GENERAL FUND RECEIPT (GFR) ACCOUNT GUIDE**

**Effective Fiscal 2020**

## **Scenario 5 Non-Custodial Statement Collections: Collection of Proceeds From Disposition of Personal Property** (Assume the replacement property is not acquired within a 2 year period; therefore, the money is deposited into Treasury’s GFR Account.) 

**Disposition of Personal Property**

Agencies can use the proceeds from the disposal of personal property to acquire replacement property within a prescribed time limit (the year the property is disposed plus one subsequent year.) If an acquisition of the replacement property does not occur within the prescribed time, the proceeds must be transferred to a GFR account.

**If agencies have authority from legislation to keep proceeds for more than the prescribed period, then this scenario may not be applicable.**  The purpose of this section is to show how sales proceeds are collected into a GFR account. 

**NOTE:**In reality, proceeds are deposited directly into an agency’s budget clearing account F3845, “Proceeds of Sales, Personal Property,” when personal property is disposed.  However, for reporting purposes, the money will appear as if it’s coming into the program fund first and is then transferred to the budget clearing account.  The accounting entries are illustrated this way so that the asset (property) is properly removed from the program fund.  

Currently clearing accounts only record assets and liabilities.  But, in this case, when the fund balance is “transferred out” from a collecting entity to a clearing account the matching “transferred in” account will not be recorded in the General Fund receipt account until the clearing account disburses the fund balance in a subsequent year.  For example, a collecting entity will record “transferred out” in one year but the matching “transferred in” will not be recorded in the General Fund receipt account until the following year.  Therefore, the Issues Resolution Committee (IRC) decided that it would be cleaner to record a matching transferred in/out pair when the proceeds are transferred from the collecting entity to the clearing account and also when the fund balance is transferred from the clearing account to the GFR account in the subsequent period.  This process will cause F3845 to have a net position, because the proceeds transferred in to the clearing account is generally not used or returned to the GFR account within the same accounting period.  **Having a net position in a budget clearing account, F3845, is an exception, and should not be normal practice for most clearing accounts.**

**Beginning Trial Balance**

**Year 2 – 1st Quarter**

**Preclosing Trial Balance**

**Financial Statements:**

**Year 2 – 4th Quarter**

**Year 2 Preclosing Trial Balance**

**Year 2 – Preclosing Adjusting Entry**

**Year 2 Preclosing Adjusted Trial Balance**

**Financial Statements**

**Reclassified Statements:**

**Closing Entries**

**Post-Closing Trial Balance**

**Note: All accounts should be zero in Post-Closing Trial Balance.**

                                                                                                                     Page 2 of 2                                               IRC Handout April 23, 2020