Problem 7-3.Central Duplicating Internal Service Fund.
As of September 30, 2010, the Central Duplicating Fund of the Town of Fredericksburg had the following post-closing trial balance:
During the fiscal year ended September 30, 2011, the following transactions (summarized) occurred:
- Employees were paid $290,000 wages in cash; additional wages of $43,500 were withheld for federal income and social security taxes. The employer’s share of social security taxes amounted to $23,375.
- Cash remitted to the federal government during the year for withholding taxes and social security taxes amounted to $65,500.
- Utility bills received from the Town of Fredericksburg’s Utility Fund during the year amounted to $23,500.
- Office expenses paid in cash during the year amounted to $10,500.
- Service supplies purchased on account during the year totaled $157,500.
- Parts and supplies used during the year totaled $152,300 (at cost).
- Charges to departments during the fiscal year were as follows:
- Unpaid balances at year-end were as follows:
- Payments to the Utility Fund totaled $21,800.
- Accounts Payable at year-end amounted to $13,250.
- Annual depreciation rate for machinery and equipment is 10 percent.
- Revenue and expense accounts for the year were closed.
- Prepare a statement of revenues, expenses, and changes in net assets for the year.
- Comment on the evident success of the pricing policy of this fund, assuming that charges are intended to cover all operating expenses, including depreciation, but are not expected to provide a net income in excess of 3 percent of billings to departments.
- Prepare a statement of net assets for the Central Duplicating Fund as of September 30, 2011.
- Prepare a statement of cash flows for the Central Duplicating Fund for the year ended September 30, 2011.
Problem7-8. Enterprise Fund Journal Entries and Financial Statements.
Following is the June 30, 2010, statement of net assets for the City of Bay Lake Water Utility Fund.
- For fiscal year 2011, prepare general journal entries for the Water Utility Fund using the following information.
- The amount in the Accrued Utility Revenue account was reversed.
- Billings to customers for water usage during the fiscal year 2011 totaled $2,982,557; $193,866 of the total was billed to the General Fund.
- Cash in the amount of $260,000 was received. The cash was for interest earned on investments and $82,000 in accrued interest.
- Expenses accrued for the period were: management and administration, $360,408; maintenance and distribution, $689,103; and treatment plant, $695,237.
- Cash receipts for customer deposits totaled $2,427.
- Cash collections on customer accounts totaled $2,943,401, of which $209,531 was from the General Fund.
- Cash payments for the period were as follows: Accounts Payable, $1,462,596; interest (which includes the accrued interest payable), $395,917; bond principal, $400,000; machinery and equipment $583,425; and return of customer deposits, $912.
- A state grant amounting to $475,000 was received to help pay for new water treatment equipment.
- Accounts written off as uncollectible totaled $10,013.
- The utility fund transferred $800,000 in excess operating income to the General Fund.
- Adjusting entries for the period were recorded as follows: depreciation on buildings was $240,053 and on machinery and equipment it 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.
- The Revenue Bond Payable account was adjusted by $400,000 to record the current portion of the bond.
- Closing entries and necessary adjustments were made to the net asset accounts.
- Prepare a statement of revenues, expenses, and changes in fund net assets for the Water Utility Fund for the year ended June 30, 2011.
- Prepare a statement of net assets for the Water Utility Fund as of June 30, 2011.
- Prepare a statement of cash flows for the Water Utility Fund as of June 30, 2011.