Homework SourseThe Town of Weston has a Water Utility Fund with the followi
The Town of Weston has a Water Utility Fund with the following trial balance as of July 1, 2016, the first day of the fiscal year:
During the year ended June 30, 2017, the following transactions and events occurred in the Town of Weston Water Utility Fund:
Accrued expenses at July 1 were paid in cash.
Billings to nongovernmental customers for water usage for the year amounted to $1,380,000; billings to the General Fund amounted to $107,000.
Liabilities for the following were recorded during the year:
Materials and supplies were used in the amount of $275,000, all for costs of sales and services.
$14,000 of old accounts receivable were written off.
Accounts receivable collections totaled $1,462,000 from nongovernmental customers and $48,400 from the General Fund.
$1,035,000 of accounts payable were paid in cash.
One year’s interest in the amount of $175,000 was paid.
Construction was completed on plant assets costing $250,000; that amount was transferred to Utility Plant in Service.
Depreciation was recorded in the amount of $260,000.
Interest in the amount of $25,000 was reclassified to Construction Work in Progress. (This was previously paid in item 8.)
The Allowance for Uncollectible Accounts was increased by $9,900.
As required by the loan agreement, cash in the amount of $100,000 was transferred to Restricted Assets for eventual redemption of the bonds.
Accrued expenses, all related to costs of sales and services, amounted to $89,000.
Nominal accounts for the year were closed.
Required:
a. Record the transactions for the year in general journal form.
b. Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Position.
c. Prepare a Statement of Net Position as of June 30, 2017.
d. Prepare a Statement of Cash Flows for the year ended June 30, 2017. Assume all debt and interest are related to capital outlay. Assume the entire construction work in progress liability (see item 3) was paid in entry 7. Include restricted assets as cash and cash equivalents.
| Debits | Credits | |||||
| Cash | $ | 330,000 | ||||
| Customer accounts receivable | 200,000 | |||||
| Allowance for uncollectible accounts | $ | 30,000 | ||||
| Materials and supplies | 120,000 | |||||
| Restricted assets (cash) | 250,000 | |||||
| Utility plant in service | 7,000,000 | |||||
| Accumulated depreciation—utility plant | 2,600,000 | |||||
| Construction work in progress | 100,000 | |||||
| Accounts payable | 120,000 | |||||
| Accrued expenses payable | 75,000 | |||||
| Revenue bonds payable | 3,500,000 | |||||
| Net position | 1,675,000 | |||||
| Totals | $ | 8,000,000 | $ | 8,000,000 | ||
Solution
a. General Journal Form Debits Credits 1. Accured Expenses 75000 Cash 75000 2. Customers Accounts Receivable 1380000 Due to General Fund 107000 Operating Revenue- Charges from Sales & Services 1487000 3. Material & Supplies 185000 Cost of Sales & Sevices 360000 Administrative expenses 200000 Construction work in progress 220000 Accounts Payable 965000 4. Cost of Sales & Services 275000 Material & Supplies 275000 5. Allowance for Uncollectible accounts 14000 Customer Accounts Receivable 14000 6. Cash 1510400 Customer Accounts receivables 1462000 Due from General Fund 48400 7. Accounts Payable 1035000 Cash 1035000 8. Nonoperating expenses-Interest 175000 Cash 175000 9. Utility Plant in service 250000 Contruction work in progress 250000 10. Operating Expenses-Depreciation 260000 Accumulated Depreciation-Utility Plant 260000 11. Contruction work in progress 25000 Nonoperating Expenses-Interest 25000 12. Operating Revenue-Charges for Sales & Services 9900 Allowance for Uncollectible accounts 9900 13. Restricted Assets 100000 Cash 100000 14. Cost of Sales & Services 89000 Accrued expenses 89000 15. Operating Revenue-Charges for Sales & Services 1477100 Operating Expenses-Cost of sales & services 724000 Operating Expenses-Administration 200000 Operating Expenses-Depreciation 260000 Nonoperating expenses- Interest 150000 Net Assets 143100 b. Statement of Revenues, Expenses and Changes in Fund Net Position Operating Revenue: Charges for Sales & Services $1,477,100 Operating Expenses: Cost of Sales & Services $724,000 Administrative expenses $200,000 Depreciation $260,000 Total Operating Expenses $1,184,000 Operating Income $293,100 Nonoperating Expenses: Interest $150,000 Change in Net Assets $143,100 Net Assets-July 1, 2016 $1,675,000 Net Assets-June 30, 2017 $1,818,100 c. Statement of Net Position as of June 30, 2017 Assets: Current & Accured Assets: Cash $455,400 Customer Accounts Receivable 104000 Less: Allowance for uncollectible accounts -25900 78100 Due from General Funds 58600 Material & Supplies 30000 Total Current & Accrued Assets $622,100 Other Property & Investment: Restricted Assets $350,000 Utility Plant Utility Plant in Service 7250000 Less: Accumulated Depreciation -2860000 Utility Plant-Net 4390000 Construction work in progress 95000 Net Utility Plant $4,485,000 Total Assets $5,457,100 Liabilities: Current Liabilities: Accounts Payable 50000 Accured Expenses 89000 Total Current Liabilities 139000 Long Term Debts: Revenue Bonds Payable $3,500,000 Total Liabilities $3,639,000 Net Positon $1,818,100 Total Liabilities $5,457,100 d. Statement of Cash Flows for the year ended June 30, 2017 Cash flow from Operating Activities: Cash received from Customers $1,510,400 Cash paid to Suppliers & Employees ($890,000) Net Cash Provided by Operating Activities $620,400 Cash Flow from Capital & Related Financial Activites Interest paid on Long term Debt ($175,000) Constriction of Fixed Assets ($220,000) Net Cash Used for Capital & Related Financial Activites ($395,000) Net Increase in Cash & Cash Equivalent $225,400 Cash & Cash Equivalents July 1, 2016 $580,000 Cash & Cash Equivalents June 30, 2017 $805,400 Note: 1. Cash paid to Supplier & Employees = $75000(#1)+$1035000(#7)-$220000(#3)(Contruction WIP) = $890000 2. Cash & Cash Equivalent = $455400(Per Balance Sheet)+$350000(Restricted Assets) = $805400
