Question

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:

	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

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	$	185,000
Costs of sales and services		360,000
Administrative expenses		200,000
Construction work in progress		220,000

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.

Answer 1

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