Question: (Journal entries and financial statements for an Enterprise Fund) The Metro Central Railroad is a commuter railroad that stops at the Village of Katonah. Katonah, a growing community, decides to construct and operate a parking lot near the railroad station to accommodate the needs of its citizens. The activities of the parking lot will be accounted for in an Enterprise Fund, known as the Katonah Metro Parking Fund, because the activity will be financed with debt secured solely by pledge of the facility's net revenues from parking fees. This problem covers transactions and events during calendar years 2012 and 2013. Prepare journal entries for the following Parking Fund transactions and events during 2012:
1. Receives $5,000,000 from the sale of revenue bonds at par. The revenue bonds were sold on July 1, 2012. They mature at the rate of $250,000 a year over a period of 20 years, starting July 1, 2013. Interest on the bonds is payable annually, also starting July 1, 2013, at 4 percent per annum on the outstanding debt.
2. Pays $1,000,000 to acquire a vacant lot near the railroad station.
3. Pays $4,000,000 to construct the parking lot.The lot is completed and ready for opening as of December 31, 2012.
4. Accrues interest for 6 months on the serial bonds. (Although interest during the construction period should be capitalized in Enterprise Funds, the village considers the amount immaterial and charges it to expense.)
5. Receives an invoice for $80,000 from the Village of Katonah General Fund for all expenses incurred in financing and planning for constructing the parking lot. Based on the foregoing transactions and events, the Katonah Metro Parking Fund starts calendar year 2013 with the following trial balance:
Prepare journal entries to record the following transactions and events of the Katonah Metro Parking Fund for calendar year 2013. Then prepare a statement of revenues, expenses, and changes in net position for the year and a statement of net position as of December 31, 2013.
1. Receives cash from parking fees in the amount of $800,000.
2. Receives cash of $60,000 in December 2013 from parking lot customers who rent space for the month of January 2014.
3. Pays the amount due at the start of the year to the Village of Katonah.
4. Pays the following expenses: salaries-$125,000; insurance-$20,000; utilities-$35,000.
5. Pays the first installment of principal and interest on the revenue bonds, due July 1, 2013.
6. Accrues interest on the revenue bonds as of December 31, 2013.
7. Records one year's depreciation on the depreciable assets. The depreciable assets are estimated to have a useful life of 20 years.