The City of Ashville operates an internal service fund to provide garage space a
ID: 2512855 • Letter: T
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).
Explanation / Answer
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