The Hills City maintains a Water and Sewer Fund to provide utility…

The Hills City maintains a Water and Sewer Fund to provide utility services to its citizens. As of January 1, 2020, the Water and Sewer Fund had the following account balances:


Cash $102,000
Customer Accounts Receivable      80,000
Estimated Uncollectible Accounts Receivable     $4,500
Materials and Supplies      28,000
Advance to Stores and Services Fund      30,000
Restricted Assets    117,000
Water Treatment Plant in Service4,200,000
Construction Work in Progress    203,000
Accumulated Depreciation – Utility Plant1,200,000
Accounts Payable      96,500
Revenue Bonds Payable (5% interest)2,500,000
Net position    959,000


(1) During the year, sales of water to non-government customers amounted to $1,025,000 and sales of water to the General Fund amounted to $37,000.

(2) Collections from non-government customers amounted to $983,000.

(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 $261,000 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, $180,000; 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 (5%) was paid.

(8) In accord with the revenue bond indenture, $25,000 cash was transferred from operating cash to restricted assets.

(9) Construction projects at the water treatment plant (reflected in the beginning balance of construction in process) were completed in the amount of $214,000, and the assets were placed in service. Payments for these amounts were made in the previous year (no effect on 2020 Statement of Cash Flows).

(10) Collection efforts were discontinued on bills totaling $3,500. The unpaid receivables were written off.

(11) An analysis of customer receivable balances indicated the Estimated Uncollectible Accounts needed to be increased by $6,500.

(12) Payment of accounts payable amounted to $332,000. 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 $267,000.



(A) Open a general journal for the Water and Sewer Utility Fund and record the above transactions.


(B) A Statement of Revenues, Expenses, and Changes in Fund Net position for the Year Ended December 31, 2020.


(C) A Statement of Net position, as of December 31, 2020.


(C) A Statement of Cash Flows for the Year Ended December 31, 2020. 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).

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