Question

The following information for the year ended June 30 pertains to a proprietary fund established by Burwood Village in connection with Burwood’s public parking facilities:
Receipts from users of parking facilities: $400,000
Cash outlays:
Parking meters: 210,000
Salaries and utilities expenses: 90,000
Depreciation of parking meters: 70,000

For the year ended June 30, the proprietary funds statement of revenues, expenses, and changes in fund net position should report operating income for the parking facilities of

A. $240,000
B. $0
C. $30,000
D. $100,000

Answer 1

Answer:

A. $240,000

Explanation:

Operating income = Revenues - expenses

For Burwood Village:

Revenues equal receipts from parking fee which is $ 400,000

Expenses = salaries and utility expenses and depreciation.

Income = $ 400,000- (70,000 +90,000)

 =$240,000.00

Parking meters are assets for the business. Their costs will be spread through their useful years. Each year, their cost will be captured as depreciation and deducted from the revenues for that year.