Question

Enterprise Fund Journal Entries and Financial Statements. Following is the June 30, 2017, statement of net position for the City of Bay Lake Water Utility Fund.

$ch7_fig135.png$

Page 301

Required

A. For fiscal year 2017, prepare general journal entries for the Water Utility Fund using the following information.

1.The amount in the Accrued Utility Revenue account was reversed.

2.Billings to customers for water usage during fiscal year 2017 totaled $2,982,557; $193,866 of the total was billed to the General Fund.

3.Cash in the amount of $260,000 was received. The cash was for interest earned on investments and $82,000 in accrued interest.

4.Expenses accrued for the period were: management and administration, $360,408; maintenance and distribution, $689,103; and treatment plant, $695,237.

5.Cash receipts for customer deposits totaled $2,427.

6.Cash collections on customer accounts totaled $2,943,401, of which $209,531 was from the General Fund.

7.Cash payments for the period were as follows: Accounts Payable, $1,462,596; interest (which includes the interest payable), $395,917; bond principal, $400,000; machinery and equipment, $583,425; and return of customer deposits, $912.

8. A state grant amounting to $475,000 was received to help pay for new water treatment equipment.

9.Accounts written off as uncollectible totaled $10,013.

10.The utility fund transferred $800,000 in excess operating income to the General Fund.

11.Adjusting entries for the period were recorded as follows: depreciation on buildings was $240,053 and on machinery and equipment was $360,079; the allowance for uncollectible accounts was increased by $14,913; an accrual for unbilled customer receivables was made for $700,000; accrued interest income was $15,849; and accrued interest expense was $61,406.

12.The Revenue Bond Payable account was adjusted by $400,000 to record the current portion of the bond.

13.Closing entries and necessary adjustments were made to the net position accounts.

B. Prepare a statement of revenues, expenses, and changes in fund net position for the Water Utility Fund for the year ended June 30, 2017.

C. Prepare a statement of net position for the Water Utility Fund as of June 30, 2017.

D. Prepare a statement of cash flows for the Water Utility Fund as of June 30, 2017.

Answer 1

Answer 1.
Journal entry
Date	Particulars	Dr. Amt.	Cr. Amt
1	Sale of Water                                          Dr.	500,000
	To Accrued Utility Revenue		500,000
2	Accounts Receivables                         Dr.	2,788,691
	Due from General fund                      Dr.	193,866
	To Sales of Water		2,982,557
3	Cash                                                           Dr.	260,000
	To Accrued Interest receivables		82,000
	To Interest Icome		178,000
4	Management & Admn. Exp.             Dr.	360,408
	Maint. & Distribution Exp.                Dr.	689,103
	Treatment Plant Exp.                          Dr.	695,237
	To Accounts Payable		1,744,748
5	Cash- restricted                                    Dr.	2,427
	To Customer - Deposits		2,527
6	Cash                                                           Dr.	2,943,401
	To Accounts receivables		2,733,870
	To Due from General fund		209,531
7	Accounts Payable                                 Dr.	1,462,596
	Accrued Interest Payable                  Dr.	131,772
	Interest Exp.                                           Dr.	264,145
	Current portion - Long Term debt Dr.	400,000
	Mach. & equipment                             Dr.	583,425
	Customer Deposits                              Dr.	912
	To cash		2,841,938
	To cash-restricted		912
8	Cash                                                            Dr.	475,000
	To Contribution - Capital Grant		475,000
9	Prov. For Uncollectible Account      Dr.	10,013
	To Accounts receivables		10,013
10	Interfund Transfer Out                        Dr.	800,000
	To Cash		800,000
11	Dep. Exp.                                                   Dr.	600,132
	Uncollectible Accounts                       Dr.	14,913
	Int. Exp.                                                     Dr.	61,406
	To Accumulated dep. - Buildings		240,053
	To Accumulated dep. - Mach. & Eq.		360,079
	To Prov for Uncollectible Account		14,913
	To Accrued Int. Payable		61,406
12	Accrued Utility Revenue                   Dr.	700,000
	Accrued Interest receivable            Dr.	15,849
	To sale of Water		700,000
	To Interest Income		15,849
13	Revenue Bond Payable                     Dr.	400,000
	To Current portion - Long Term Debt		400,000
14	Sales of water                                       Dr.	3,182,557
	Interest Income                                   Dr.	193,849
	Contribution-Capital grant	475,000
	To Management & Admn. Exp.		360,408
	To Manit. & Distribution Exp.		689,103
	To Treatment Plant Exp.		695,237
	To Interfund Transfer Out		800,000
	To Interest fund		325,551
	To depreciation exp.		600,132
	To uncollectible Accounts		14,913
	To Net Assets - Unrestricted		366,062
15	Net Asset - resctricted                      Dr.	383,293
	To Net of related debt		383,293

Answer 2.
STATEMENT OF REVENUE, EXPENSES, AND CHANGES
IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2017
OPERATING INCOME:
SALES OF WATER (NET OF $14,913 PROVISION FOR UNCOLLECTIBLE ACCOUNTS		3,167,644
OPERATING EXPENSES:
MANAGEMENT & ADMINISTRATION	360,408
MAINTENANCE & DISTRIBUTION	689,103
Treatment plant	695,237
Depreciation	600,132
Total operating expenses		2,344,880
Opearting income		822,764
Non-Operating Revenue / Expenses
Interest Income	193,849
Interest Exp.	(325,551)
Total non opearting Income (Expense)		(131,702)
		691,062
Interfund Transfers Out		(800,000)
capital Contributions		475,000
Change in net Positions		366,062
Net Position, july 1, 2016		5,513,127
Net Position, June 30, 2017		5,879,189
Answer 3.
Staement of net Position
June-30, 2017
Assets
Current Assets
Cash & Investments	1,811,482
Account receivables (Net of $18267 - Prov for Uncollectible Accounts)	346,777
Accrued Utility revenue	700,000
Due from general fund	13,646
Interest receivables	15,849
Total Current Assets		2,887,754
Restricted Assets
Cash		10,708
Capital Assets
Land	1,780,945
Buildings (Net of 3660053 in Accumulated Dep.)	4,974,354
Mach. & equip. (Net of 5490007 in Accumulated Dep.)	8,711,741
Total Capital assets		15,467,040
Total Assets		18,365,502
Liabilities
Current Liabilities
Accounts Payable	814,199
Interest Payable	61,406
Current Portion - Long Term debt	400,000
Total Current liabilities		1,275,605
Liabilities Payable from restricted Assets
Customer deposits		10,708
long term Liabilities
Revenue Bond payable		11,200,000
Total liabilities		12,486,313
Net Position
Net Invetment in capital Assets	3,867,040
Unrestricted	2,012,149
Total net Position		5,879,189
Answer 4.
Statement of cash Flow
For the year ended June 30, 2017
Cash flow from Operating Activities
Cash recd. From Customers	2,943,401
Cash Paid to:
Employees & Suppliers	(1,462,596)
net Cash provided by operations		1,480,805
Cash Flow from Non Capital Financing Activities
Transfer to general Funds	(800,000)
Customer deposits	1,515
Net cash used by Non Capital Financing Activities		(798,485)
Cash Flow from Capital & related Financing Activities
Proceeds from Capital grant	475,000
purch. Of Mach & equipments	(583,425)
Principal paid on capital debt	(400,000)
Interest paid - capital debt	(395,917)
Related Financing Activities		(904,342)
Cash Flow from investing Activities
Interest Recd - Investments	260,000
Net cash from Investing Activities		260,000
Net Increase in Cash & cash equivalents		37,978
Cash & Cash equivalent at the beginning		1,784,212
Cash & Cash equivalent at the end		1,822,190