Question

The City of Ashville operates an internal service fund to provide garage space and repairs for all city-owned-and-operated vehicles. The Central Garage Fund was established by a contribution of $300,000 from the General Fund on July 1, 2015, at which time the land and building were acquired. The post-closing trial balance at June 30, 2016, was as follows: Debits Credits Cash $ 110,000 Due from Other Funds 9,000 Inventory of Supplies 90,000 Land 50,000 Building 250,000 Allowance for Depreciation—Building $ 20,000 Machinery and Equipment 65,000 Allowance for Depreciation— Machinery and Equipment 12,000 Vouchers Payable 31,000 Net Position—Net Investment in Capital Assets 333,000 Net Position—Unrestricted 178,000 $ 574,000 $ 574,000 The following information applies to the fiscal year ended June 30, 2017: 1. Supplies were purchased on account for $92,000; the perpetual inventory method is used. 2. The cost of supplies used during the year ended June 30, 2017, was $110,000. A physical count taken as of that date showed materials and supplies on hand totaled $72,000 at cost. 3. Salaries and wages paid to employees totaled $235,000, including related costs. 4. Billings totaling $30,000 were received from the enterprise fund for utility charges. The Central Garage Fund paid $27,000 of the amount owed. (At the government-wide level, record the payable amount as Internal Balances.) 5. Depreciation of the building was recorded in the amount of $10,000; depreciation of the machinery and equipment amounted to $9,000. 6. Billings to other departments for services provided to them were as follows: General Fund $ 270,000 Special Revenue Fund 127,000 7. Unpaid interfund receivable balances were as follows: 6/30/16 6/30/17 General Fund $ 2,500 $ 3,000 Special Revenue Fund 6,500 9,000 8. Vouchers payable at June 30, 2017, were $16,000. 9. For June 30, 2017, closing entries were prepared for the Central Garage Fund (ignore government-wide closing entry).

Answer 1

Solution:

Preparing the Journal Entries for the Above Transactions:

Event	General Journal	Debit	Credit
1	Internal Service Fund & Governmental Activities
	Inventory Suppiles	$92,000
	Vouchers Payable		$92,000
2	Internal Service Fund
	Cost of Supplies Used	$110,000
	Inventory of Supplies		$110,000
	Governmental Activties
	Expenses - General Government	$110,000
	Inventory of Supplies		$110,000
3	Internal Service Fund
	Salaries and Wages Expense	$235,000
	Cash		$235,000
	Governmental Activties
	Expenses - General Government	$235,000
	Cash		$235,000
4	Internal Service Fund
	Utilities Expense	$30,000
	Due to Other Funds		$3,000
	Cash		$27,000
	Governmental Activties
	Expenses - General Government	$30,000
	Internal Balances		$3,000
	Cash		$27,000
5	Internal Service Fund
	Depreciation expense - Building	$10,000
	Depreciation expense - Machinery and Equipment	$9,000
	Allowance for Deprecation - Building		$10,000
	Allowance for Deprecation - Machinery and Equipment		$9,000
	Governmental Activties
	Expenses - General Government	$19,000
	Allowance for Deprecation - Building		$10,000
	Allowance for Deprecation - Machinery and Equipment		$9,000
6	Internal Service Fund
	Due from Other Funds	$397,000
	Billings to Departments		$397,000
	Governmental Activties
	Internal Balances	$90,000
	Program Revenues - Charges For Services - General Government		$90,000
7	Internal Service Fund
	Cash	$394,000
	Due from Other Funds		$394,000
	($9,000 + $397,000 - $12,000 = $394,000)
	Governmental Activties
	Cash	$91,000
	Internal Balances		$91,000
	($3,000 + $9,000 - $2,000 = $91,000)
8	Internal Service Fund & Governmental Activities
	Vouchers Payable	$107,000
	Cash		$107,000
	($31,000 + $92,000 - $16,000 = $107,000)
9	Internal Service Fund
	Closing Entries
	Billings to Departments	$397,000
	Cost of Supplies Used		$110,000
	Salaries and Wages expense		$235,000
	Utilities expense		$30,000
	Depreciation Expense - Building		$10,000
	Depreciation expense - Machinery and Equipment		$9,000
	Excess of Net Billings Over costs		$3,000
	Excess of Net Billings Over costs	$3,000
	Net Assets - Unrestricted		$3,000
	Net assets - Invested in Capital	$19,000
	Net Assets - Unrestricted		$19,000