Palo Alto City has operated a City Utility (Enterprise) Fund for a number of years. The fund accounts for the activities of the city-owned electric, water and sewer systems. During the current year, the city engaged in the following transactions related to the city utility Fund.

REQUIRED: Prepare the appropriate journal entries. If none is required, write No entry required.

A. The city received $2 million from a developer to connect new houses to the existing utility lines.

B. The city billed its customers $500,000 for services provided during the year.

C. Depreciation on existing physical plant was $650,000.

D. Revenue bonds in the amount of $5 million were issued at par to finance new construction. The bond agreement requires that the city retain $800,000 of the bond proceeds for purposes of servicing the debt if revenues are not sufficient to do so.

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