Continuous Problem City of Monroe 9 Chapter 6 Proprietary Funds 6C. 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, 2014: Debits Credits Cash $17,000 Due from other funds 25,000 Inventory of supplies 35,000 Land 19,000 Buildings 82,000 Accumulated depreciationbuildings $21,500 Equipment 46,000 Accumulated depreciationequipment 18,000 Accounts payable 13,500 Advance from water utility fund 30,000 Net position 141,000 Totals $224,000 $224,000 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 2014. 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, 2014, was collected in full. (3) During the year, supplies were ordered and received in the amount of $302,000. This amount was vouchered. (4) $10,000 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, $11,500; Warehousing, $16,000; Delivery, $17,500; and Administrative, $8,800. (7) Cash was received from the General Fund in the amount of $300,000 and from the Water Utility Fund in the amount of $50,000. (8) Accounts payable were paid in the amount of $357,000. (9) Depreciation in the amount of $8,200 was recorded for buildings and $11,000 for equipment. Continuous Problem City of Monroe 10 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 Position. Compute the balance in the net position accounts, assuming there is no Restricted net position. 6C. 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, 2014, the City of Monroe Water and Sewer Fund had the following account balances: Debits Credits Cash $112,600 Customer Accounts Receivable 89,000 Estimated Uncollectible Accounts Receivable $3,600 Materials and Supplies 96,300 Advance to Stores and Services Fund 30,000 Restricted Assets 117,000 Water Treatment Plant in Service 4,075,000 Construction Work in Progress 203,000 Accumulated Depreciation - Utility Plant 687,500 Accounts Payable 132,000 Revenue Bonds Payable 2,500,000 Net position 1,399,800 Totals $4,722,900 $4,722,900 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 $997,900 and sales of water to the General Fund amounted to $45,000. (2) Collections from non-government customers amounted to $935,000. (3) The Stores and Services Fund repaid $10,000 of the long-term advance to the Water and Sewer Fund. (4) Materials and supplies in the amount of $263,000 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, $165,000; selling, $15,000; administration, $18,000; construction work in progress, $62,000. (6) Payroll costs for the year totaled $416,200. Of that amount, $351,900 was paid in cash, and the remainder was withheld for taxes. In addition, taxes that are expenses of the utility amounted to $34,200. The $450,400 (416,200 + 34,200) was distributed as follows: cost of sales and services, $265,800; sales, $49,900; administration, $91,400; construction work in progress, $43,300. Continuous Problem City of Monroe 11 (7) Bond interest (6%) 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 were completed in the amount of $235,000, and the assets were placed in service. Payment was not yet made. (10) Collection efforts were discontinued on bills totaling $4,260. The unpaid receivables were written off. (11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $6,300. (12) Payment of accounts payable amounted to $305,500. 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, $17,500 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 Position. Compute the balance in the net aposition accounts, assuming the only restricted amounts are those identified with the bond indenture and the outstanding bonds are associated with the purchase of capital assets. 6C. 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 Position for the Year Ended December 31, 2014. (2) A Statement of Net Position, as of December 31, 2014. (3) A Statement of Cash Flows for the Year Ended December 31, 2014. 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).