Question

Part V. Internal Service Fund

Moody Village maintains an Internal Service Fund (ISF) for the motor pool. Prepare the journal entries to record the following transactions in the accounts of the ISF only.

a. The general fund (GF) transfers $250,000 to the ISF as capital to start the ISF. (Assume no accruals have been recorded, nor should there have been, for this transfer.)

b. The ISF purchases various equipment for $100,000 on account.

c. The ISF purchased supplies for $10,000, paying cash. (Assume no accrual has been recorded, nor should there have been, for this transaction or event.)

d. Billings sent to the Enterprise fund for automobile usage amount to $100,000.

e. Depreciation for the year on the equipment amounts to $15,000

f. The General fund bills the ISF $5,000 for data processing services. These were not paid by year end.

Answer 1

Journal Enties in records of ISF

S.No.	Account title and particulars	Debit (in $)	Credi (in $)
a	ISF
	Cash a/c Dr	250,000
	To Transfer in from General Fund- Capital contribution		250,000
	( being funds transferred from GF to start business)
b	ISF
	Equipment a/c Dr	100,000
	To Accounts payable a/c Cr		100,000
	(Being equipment purchased on credit)
c	ISF
	Supplies a/c Dr	10,000
	To cash a/c Cr		10,000
	(being supplies puchased by paying cash)
	ISF
d	Dues from enterprise a/c Dr	100,000
	To Revenue-(automobile usage) a/c Cr		100,000
	(being bills sent to enterprise fund for automobile usage)
e	ISF
	Depreciation expense - equipment a/c Dr	15,000
	To Accumulated depreciation a/c - equipment Cr		15,000
	(being depreciation on equipment recorded to accumulated depreciation a/c)
f	Data processing expense a/c Dr	5000
	To Dues to General fund a/c Cr		5000
	(to record bills sent by general fund for data processing)
	Note: the amount due on data processing is not yet paid, which will appear
	as inernal balances for amount payable in GA a/c)