Journal entries for an Internal Service Fund
The Arlington Motor Pool Internal Service Fund had the
following transactions and events during January 2018. Using the
"Additional Information" provided below. Prepare journal entries to
record the following transactions:
January 2018 transactions:
1. Paid salaries for the month in cash (1/12 of $80,000)
2. Paid $600 cash for fuel and maintenance expenses
3. Recorded depreciation expense for the month
4. Recorded insurance expense for the month
5. Accrued benefits expense for the month
6. Billed for motor vehicle services as follows: General Fund,
80 trips; Golf Course Enterprise Fund,10 trips
Automobiles:The Motor Pool uses two 6-passenger vans, each
costing $45,000 and each estimated to have a 5-year life when they
were acquired in 2017.
Driver salaries:The Motor Pool has a driver-administrator, who
earns $45,000 a year, and a driver, who earns $35,000. The town
uses a rate of 30 percent (to cover benefits, including pensions)
for planning purposes.
Insurance:In 2017, the town purchased a 3-year automobile
accident policy at a cost of $6,000.
Fuel and maintenance costs:Based on experience, the
driver-administrator estimates that total fuel and maintenance
costs for the year will be $8,000.
Billing units:To simplify its record keeping, the Motor Pool
charges a fixed price per trip. Arlington’s budget office estimates
it will provide 800 trips to the town’s departments in 2018.
HINT: You will need to compute the break even price per trip
using the above Additional Information for the transaction 6.