Question

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 Entries in the books of ISF.

a) Genreal Fund A/c----Dr. $250000

To Capital A/c (ISF) $250000

(Being general fund transfers $250000 to ISF as capital)

b) Equipment A/c------Dr. $100000

To Equipment Supplier A/c $100000

(Being equipment purchased on account)

c) Purchases (supplies) A/c--Dr. $10000

To Cash A/c $10000

(Being supplies purchased for cash)

d) Accounts receivable A/c---Dr. $100000

To Enterprise Fund A/c $100000

(Being bills sent to enterprise fund for automobile usage)

e) Depreciation A/c-----------Dr. $15000

To Equipment A/c $15000

(Being depreciation provided on equipment)

f) General fund A/c---------Dr. $5000

To Accounts payable a/c $5000

(Being Accounts payable recorded as bills sent by generall fund for data processing services)

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