Problem 7-4: Journal Entries and Financial Statements for an Enterprise Fund
(a) Journal Entries
1. Cash $2,000,000
Transfer in from General Fund – permanent contribution $2,000,000
To record transfer of initial capital from General Fund.
Cash $25,000,000
Revenue bonds payable $25,000,000
To record principal of revenue bonds received.
Accounts receivable $8,000
Land $19,000,000
Buildings $5,000,000
Equipment $1,800,000
Accounts Payable $12,000
Cash $25,796,000
To record purchase of an airport from a private company.
2. Accounts receivable $3,900,000
Rental revenues $3,900,000
To record charges for rental rights to airlines.
Estimated uncollectible accounts $10,000
Allowance for uncollectible accounts $10,000
To record estimated uncollectible accounts.
3. Supplies $4,500
Accounts payable $4,500
To record purchase of supplies on credit.
4. Cash $3,850,000
Accounts receivable $3,850,000
To record collections from airlines.
5. Salaries Expense $200,000
Cash $200,000
To record payment of salaries to airport personnel.
6. Utilities Expense $100,000
Cash $100,000
To record payment of utilities.
7. Cash $1,000
Accounts receivable $1,000
To record collection from Air Chance.
8. Cash $3,000,000
Transfer in from General Fund – permanent contribution $3,000,000
To record transfer from General Fund as an additional permanent contribution.
9. Interest Expense $1,825,000
Cash $1,825,000
To record bond interest paid.
10. Supplies Expense $3,600
, Supplies $3,600
To record used-up supplies.
11. Cash $1,500,000
Advance received from General Fund $1,500,000
To record advance received from General Fund.
12. NO ENTRY because it was just a contract that was signed.
13. Investments – CDs $2,000,000
Cash $2,000,000
To record investment in CDs.
14. Cash $315,000
Investment – CDs $300,000
Interest revenue $15,000
To record redemption of CDs along with its interest revenue.
15. Equipment $300,000
Cash $300,000
To record purchase of additional equipment for cash.
16. Interest Expense $350,000
Accounts payable $350,000
To record accrued interest for the year.
17. Other Operating Expenses $55,000
Accrued operating expenses $55,000
To record accrued other expenses.
18. Depreciation Expense – buildings $500,000
Depreciation Expense – equipment $180,000
Accumulated Depreciation – buildings $500,000
Accumulated Depreciation – equipment $180,000
To record depreciation expenses for buildings and equipment for the year.
19. Accounts Payable $12,500
Cash $12,500
To record payment of credit.
20. Cash $150,000
Interest revenue $150,000
To record interest revenue received.
21. Investments – CDs $4,500,000
Cash $4,500,000
To record investment of CDs from excess cash.
(a) Journal Entries
1. Cash $2,000,000
Transfer in from General Fund – permanent contribution $2,000,000
To record transfer of initial capital from General Fund.
Cash $25,000,000
Revenue bonds payable $25,000,000
To record principal of revenue bonds received.
Accounts receivable $8,000
Land $19,000,000
Buildings $5,000,000
Equipment $1,800,000
Accounts Payable $12,000
Cash $25,796,000
To record purchase of an airport from a private company.
2. Accounts receivable $3,900,000
Rental revenues $3,900,000
To record charges for rental rights to airlines.
Estimated uncollectible accounts $10,000
Allowance for uncollectible accounts $10,000
To record estimated uncollectible accounts.
3. Supplies $4,500
Accounts payable $4,500
To record purchase of supplies on credit.
4. Cash $3,850,000
Accounts receivable $3,850,000
To record collections from airlines.
5. Salaries Expense $200,000
Cash $200,000
To record payment of salaries to airport personnel.
6. Utilities Expense $100,000
Cash $100,000
To record payment of utilities.
7. Cash $1,000
Accounts receivable $1,000
To record collection from Air Chance.
8. Cash $3,000,000
Transfer in from General Fund – permanent contribution $3,000,000
To record transfer from General Fund as an additional permanent contribution.
9. Interest Expense $1,825,000
Cash $1,825,000
To record bond interest paid.
10. Supplies Expense $3,600
, Supplies $3,600
To record used-up supplies.
11. Cash $1,500,000
Advance received from General Fund $1,500,000
To record advance received from General Fund.
12. NO ENTRY because it was just a contract that was signed.
13. Investments – CDs $2,000,000
Cash $2,000,000
To record investment in CDs.
14. Cash $315,000
Investment – CDs $300,000
Interest revenue $15,000
To record redemption of CDs along with its interest revenue.
15. Equipment $300,000
Cash $300,000
To record purchase of additional equipment for cash.
16. Interest Expense $350,000
Accounts payable $350,000
To record accrued interest for the year.
17. Other Operating Expenses $55,000
Accrued operating expenses $55,000
To record accrued other expenses.
18. Depreciation Expense – buildings $500,000
Depreciation Expense – equipment $180,000
Accumulated Depreciation – buildings $500,000
Accumulated Depreciation – equipment $180,000
To record depreciation expenses for buildings and equipment for the year.
19. Accounts Payable $12,500
Cash $12,500
To record payment of credit.
20. Cash $150,000
Interest revenue $150,000
To record interest revenue received.
21. Investments – CDs $4,500,000
Cash $4,500,000
To record investment of CDs from excess cash.
