28 Jun Question CHAPTER 7 RECORDING TRANSACTIONS AFFEC
Question
CHAPTER 7 RECORDING TRANSACTIONS AFFECTING THE ENTERPRISE FUND AND BUSINESS-TYPE ACTIVITIES
The city water utility is owned and operated by the City of Bingham. The water utility was originally constructed and operated by a private corporation, but it was sold to the city 30 years before the year for which transactions are given. The post-closing trial balance of the Water Utility Fund, as of December 31, 2019, follows:
CITY OF BINGHAM
Water Utility Fund
Trial Balance
As of December 31, 2019
Debits Credits
Cash $ 526,692
Restricted Cash—Customer Deposits 67,840
Customer Accounts Receivable 181,524
Accumulated Provision for
Uncollectible Accounts $ 5,266
Inventory of Supplies 101,799
Due from Other Funds 22,400
Utility Plant in Service 21,042,463
Accumulated Depreciation—
Utility Plant 4,765,842
Construction Work in Progress 1,402,777
Vouchers Payable 83,541
Customer Deposits 67,840
Accrued Interest Payable 477,510
Revenue Bonds Payable 15,917,000
Bond Discount on Revenue Bonds
Payable 71,720
Net Position—Net Investment in Capital
Assets 1,834,118
Net Position—Unrestricted 266,098
Totals $23,417,215 $23,417,215
Additional information:
The following information is provided about accounts shown on the December 31, 2019, trial balance:
Accrued Interest Payable represents six months’ accrual of interest on 6% revenue bonds payable. Interest is payable semiannually on January 1 and July 1 of each year. The Bond Discount is credited every six months for the amortization applicable to the interest payment period. Amortization is computed by the straight-line method. The balance of $71,720 is to be amortized over the remaining 20 years of the bond maturity.
Required
Open a general journal as of December 31, 2019 for the Water Utility Fund by entering each of the accounts and amounts shown in the above post-closing trial balance. Enter 2019 from the dropdown [Year] menu. Each of the account titles will be found in the drop down [Account] menu in the [Journal] view of the program. Be sure to enter 7a as your paragraph number in the [Add description] field and enter the appropriate paragraph number for all subsequent journal entries. Verify the accuracy of your journal entry and post it to the general ledger by clicking [Post entries]. Unless your instructor specifies electronic submission, print a post-closing trial balance as of December 31, 2019, and retain it in your cumulative file until directed by your instructor to submit it.
Entries in this enterprise fund do not have to be recorded at the government-wide level since enterprise funds and business-type activities at the government-wide level both use the same (accrual) basis of accounting and same (economic resources) measurement focus. Thus, the same information recorded in the accounts of the enterprise fund can also, with only slight modification, be reported as business-type activities at the government-wide level.
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