Question: (Journal entries and financial statements for an Enterprise Fund) The following transactions relate to the City of Arlington's Municipal Airport Fund for the fiscal year ended June 30, 2013. Prepare
(a) the journal entries necessary to record these transactions in the Municipal Airport Fund;
(b) a trial balance as of June 30, 2013;
(c) a statement of revenues, expenses, and changes in net position for the 2012-2013 fiscal year, and
(d) a statement of net position as of June 30, 2013.
1. The General Fund made a permanent contribution of $2,000,000 for working capital to start a municipal airport. The city used part of that money, together with the proceeds from a $25,000,000 revenue bond issue, to purchase an airport from a private company. The fair values of the assets and liabilities were as follows:
Accounts receivable $ 8,000
Land 19,000,000
Buildings 5,000,000
Wquipment 1,800,000
Accounts payable (12,000)
The city purchased the airport for the fair market value of its net assets.
2. Airlines were billed $3,900,000 for rental rights to use ticket counters and landing and maintenance space. Of this amount, $3,890,000 is expected to be collectible.
3. Supplies totaling $4,500 were purchased on credit.
4. Collections from airlines totaled $3,850,000.
5. Salaries of $200,000 were paid to airport personnel employed by the city.
6. Utility bills totaling $100,000 were paid.
7. A notice was received from the Last District Bankruptcy Court. Air Chance was declared bankrupt. The airport collected only $1,000 on its bill of $3,000.
8. The airport obtained $3,000,000 of additional permanent contributions from the General Fund to help finance improvements at the airport.
9. Interest of $1,825,000 was paid to the bondholders.
10. Supplies used during the year totaled $3,600.
11. The General Fund made an advance to the airport of $1,500,000. Airport management plans to repay the advance in full in 2016.
12. A contract was signed with The Construction Company for the new facilities for a total price of $5,000,000.
13. The Municipal Airport Fund invested $2,000,000 in CDs.
14. The Municipal Airport Fund received $315,000 upon redeeming $300,000 of the CDs mentioned in transaction 13.
15. The airport purchased additional equipment for $300,000 cash.
16. Interest expense of $350,000 was accrued at the end of the year.
17. Other accrued expenses totaled $55,000.
18. Depreciation was recorded as follows:
Buildings $500,000
Equipment 180,000
19. $12,500 of accounts payable was paid.
20. $150,000 of interest revenue was received.
21. Excess cash of $4,500,000 was invested in CDs.