Question

Following is the June 30, 2019, statement of net position for the City of Bay Lake Water Utility Fund. CITY OF BAY LAKE Water Utility Fund Statement of Fund Net Position June 30, 2019 Assets Current assets: Cash and investments $ 1,775,142 Accounts receivable (net of $13,367 provision for uncollectible accounts) 306,870 Accrued utility revenue 499,600 Due from General Fund 29,288 Interest receivable 81,936 Total current assets 2,692,836 Restricted assets: Cash 9,194 Capital assets: Land $ 1,781,141 Buildings (net of $3,420,381 in accumulated depreciation) 5,214,991 Machinery and equipment (net of $5,130,505 in accumulated depreciation) 8,489,354 Total capital assets (net) 15,485,486 Total Assets 18,187,516 Liabilities Current liabilities: Accounts payable 532,087 Interest payable 131,782 Current portion of long-term debt 397,000 Total current liabilities 1,060,869 Liabilities payable from restricted assets: Customer deposits 9,194 Long-term liabilities: Revenue bond payable 11,513,000 Total Liabilities 12,583,063 Net Position Net investment in capital assets 3,613,290 Unrestricted 1,991,163 $ 5,604,453 Following is the information of the Water Utility Fund for fiscal year 2020. The amount in the Accrued Utility Revenue account was reversed. Billings to customers for water usage during fiscal year 2020 totaled $3,031,965; $197,077 of the total was billed to the General Fund. Cash in the amount of $264,307 was received. The cash was for interest earned on investments and $83,358 in accrued interest. Expenses accrued for the period were management and administration, $366,374; maintenance and distribution, $700,509; and treatment plant, $706,747. Cash receipts for customer deposits totaled $2,471. Cash collections on customer accounts totaled $2,996,766, of which $213,331 was from the General Fund. Cash payments for the period were as follows: Accounts Payable, $1,489,117; interest (which includes the interest payable), $403,093; bond principal, $397,000; machinery and equipment, $579,053; and return of customer deposits, $903. A state grant amounting to $470,315 was received to help pay for new water treatment equipment. Accounts written off as uncollectible totaled $9,915. The utility fund transferred $792,172 in excess operating income to the General Fund. Adjusting entries for the period were recorded as follows: depreciation on buildings was $237,708 and on machinery and equipment was $356,562; the allowance for uncollectible accounts was increased by $14,769; an accrual for unbilled customer receivables was made for $693,241; accrued interest income was $15,695; and accrued interest expense was $60,812. The Revenue Bond Payable account was adjusted by $397,000 to record the current portion of the bond. Closing entries and necessary adjustments were made to the net position accounts.

Answer 1

• Solution =

City of Bay Lake

journal entries

Event	Particulars	Debit $	Credit $
		499600
1	Sales of Water a/c		499600
	To Accrued Utility Revenue
	(amount in the Accrued Utility Revenue account was reversed)
2	Accounts Receivable a/c	2834888
	Due from General Fund a/c	197077
	To Sales of Water		3031965
	( Billings to customers for water usage)
3	Cash a/c	264307
	To Interest Income		180949
	To Accrued Interest Receivable		83358
	(cash was for interest earned on investments )
4	Management & Administration Expense a/c	366374
	Maintenance & Distribution Expense a/c	700509
	Treatment Plant Expense a/c	706747
	To Accounts Payable		1773630
	( Expenses accrued for the period)
5	Cash Restricted a/c	2471
	To Customer Deposits		2471
	(Cash receipts for customer deposits )
6	Cash a/c	2996766
	To Accounts Receivable		2783435
	To Due from General Fund		213331
	(Cash collections on customer accounts)
7	Accounts Payable a/c	1489117
	Accrued Interest Payable a/c	131782
	Interest Expense a/c	271311
	Current Portion of Long Term debt a/c	397000
	Machinery & Equipment a/c	579053
	Customer Deposits a/c	903
	To Cash		2868263
	To Cash - restricted		903
	( Cash payments for the period)
8	Cash a/c	470315
	To Contribution - Capital Grant		470315
	(state grant amounting to $470,315 was received)
9	Accum. Prov. For Uncollectible a/c	9915
	To Accounts Receivable		9915
	(Accounts written off as uncollectible)
10	Interfund Transfer out a/c	792172
	To Cash		792172
	(utility fund transferred)
11	Depreciation Expense a/c	594270
	Uncollectible accounts a/c	14769
	Interest Expense a/c	60812
	To Accum. Depre - Building		237708
	To Accum. Depre - Mach & Equip		356562
	To Accum. Prov. For Uncollectible accounts		14769
	To Accrued Interest Payable		60812
	(Adjusting entries for the period)
12	Revenue Bond Payable a/c	397000
	To Current Portion of Long Term debt		397000
	(Revenue Bond Payable account was adjusted)
13.a	Sales of Water a/c	3225606
	Interest Income a/c	196644
	Contribution - Capital grant a/c	470315
	To Management & Administration expense		366374
	To Maintenance & Distribution expense		700509
	To Treatment Plant Expense		706747
	To Interfund Transfers out		792172
	To Interest Expense		332123
	To Depreciation Expense		594270
	To Uncollectible accounts		14769
	To Net Assets UnRestricted		385601
	(Closing Enteries)
13.b	Net Position - Unrestricted a/c	381783
	To Net Position - net Investment in Capital assets		381783
	( 579,0530 - 594,270 ) = -15,217 + 397,000 = 381,783

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