Proprietary Funds – Chapter 6 6–C. Part 1. Internal Service Fund Transactions Th
ID: 2711565 • Letter: P
Question
Proprietary Funds – Chapter 6
6–C. Part 1. Internal Service Fund Transactions
The Stores and Service Fund of the City of Monroe had the following account balances as of January 1, 2015:
Debits
Credits
Cash
$31,000
Due from other funds
27,000
Inventory of supplies
27,500
Land
18,000
Buildings
84,000
Accumulated depreciation—buildings
$33,000
Equipment
46,000
Accumulated depreciation—equipment
25,000
Accounts payable
19,000
Advance from water utility fund
30,000
Net assets
126,500
Totals
$233,500
$233,500
Required:
a. Open a general journal for the City of Monroe Stores and Service Fund and record the following transactions.
(1) A budget was prepared for FY 2015. It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven for the year.
(2) The amount due from other funds as of January 1, 2015, was collected in full.
(3) During the year, supplies were ordered and received in the amount of $303,500. This amount was posted to accounts payable.
(4) $15,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged.
(5) During the year, supplies costing $250,560 were issued to the General Fund, and supplies costing $46,400 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup ($ 313,200 to General Fund and 58,000 to the Water Utility Fund).
(6) Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $15,000; Warehousing, $16,000; Delivery, $17,500; and Administrative, $9,200.
(7) Cash was received from the General Fund in the amount of $310,000 and from the Water Utility Fund in the amount of $50,000.
(8) Accounts payable were paid in the amount of $355,700.
(9) Depreciation in the amount of $11,000 was recorded for buildings and $4,600 for equipment.
b. Post the entries to the Stores and Service Fund ledger (t-accounts).
c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming there are no Restricted Net Assets.
6–C. Part 2. Enterprise Fund Transactions
The City of Monroe maintains a Water and Sewer Fund to provide utility services to its citizens. As of January 1, 2015, the City of Monroe Water and Sewer Fund had the following account balances:
Debits
Credits
Cash
$105,000
Customer Accounts Receivable
77,000
Estimated Uncollectible Accounts Receivable
$4,000
Materials and Supplies
28,000
Advance to Stores and Services Fund
30,000
Restricted Assets
117,000
Water Treatment Plant in Service
4,200,000
Construction Work in Progress
203,000
Accumulated Depreciation - Utility Plant
1,200,000
Accounts Payable
97,000
Revenue Bonds Payable
2,500,000
Net Assets
959,000
Totals
$4,760,000
$4,760,000
Required:
a. Open a general journal for the City of Monroe Water and Sewer Utility Fund and record the following transactions.
(1) During the year, sales of water to non-government customers amounted to $1,002,000 and sales of water to the General Fund amounted to $37,000.
(2) Collections from non-government customers amounted to $962,000.
(3) The Stores and Services Fund repaid $15,000 of the long-term advance to the Water and Sewer Fund.
(4) Materials and supplies in the amount of $257,000 were received. A liability in that amount was recorded.
(5) Materials and supplies were issued and were charged to the following accounts: cost of sales and services, $164,900; selling, $15,000; administration, $18,000; construction work in progress, $50,000.
(6) Payroll costs for the year totaled $416,200 plus $34,200 for the employer’s share of payroll taxes. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $265,800; sales, $43,900; administration, $91,400; construction work in progress, $49,300.
(7) Bond interest (6½%) in the amount of $162,500 was paid.
(8) Interest in the amount of $17,000 (included in 7 above) was reclassified to Construction Work in Progress.
(9) Construction projects at the water treatment plant (reflected in the beginning balance of construction in process) were completed in the amount of $203,000, and the assets were placed in service. Payments for these amounts were made in the previous year (no effect on 2015 Statement of Cash Flows).
(10) Collection efforts were discontinued on bills totaling $3,020. The unpaid receivables were written off.
(11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $5,500.
(12) Payment of accounts payable amounted to $297,900. Payments of payroll taxes totaled $95,200.
(13) Supplies transferred from the Stores and Services Fund amounted to $58,000. Cash in the amount of $50,000 was paid to the Stores and Services Fund for supplies.
(14) Depreciation expense for the year was computed to be $275,000.
(15) In accord with the revenue bond indenture, $25,000 cash was transferred from operating cash to restricted assets.
b. Post the entries to the Water and Sewer Fund ledger (t-accounts).
c. Prepare and post an entry closing all nominal accounts to Net Assets. Compute the balance in the net asset accounts, assuming the only restricted assets are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets.
6–C. Part 3. Proprietary Fund Financial Statements
Required:
Prepare, in good form, for the proprietary funds accounted for in Parts 1 and 2, the following:
(1) A Statement of Revenues, Expenses, and Changes in Fund Net Assets for the Year Ended December 31, 2015.
(2) A Statement of Net Assets, as of December 31, 2015.
(3) A Statement of Cash Flows for the Year Ended December 31, 2015. Include restricted assets as a part of cash and cash equivalents for this statement. (Assume any materials and labor attributable to construction in process were paid by year end).
****I really need help with the cash flows. I do have the answers for everything except cash flows statement. Pls. and thank you.
Debits
Credits
Cash
$31,000
Due from other funds
27,000
Inventory of supplies
27,500
Land
18,000
Buildings
84,000
Accumulated depreciation—buildings
$33,000
Equipment
46,000
Accumulated depreciation—equipment
25,000
Accounts payable
19,000
Advance from water utility fund
30,000
Net assets
126,500
Totals
$233,500
$233,500
Explanation / Answer
Particulars Debit Credit 1 Bank A/C $27,500 - Due from other funds - $27,500 2 Supplies A/c $303,500 - Account Payables - $303,500 3 Advance from Water utility fund A/c $15,000 - Bank A/c - $15,000 4 General Fund A/c $250,560 - Water utility fund A/c $46,400 - Supplies A/c $296,960 5 Purchasing A/c $15,000 - Warehousing A/c $16,000 - Delivery A/c $17,500 - Administrative A/c $9,200 - Account Payables A/c - $57,700 6 Cash A/c $360,000 - General Fund A/c - $310,000 Water Utility Fund A/c - $50,000 7 Account Payables A/c $355,700 - Cash A/c - $355,700 8 Depreciation A/c $15,600 - Accumulated Depreciation A/c - $15,600
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