Question

6-C. Part 1. Internal Service Fund Transactions The Stores and Service Fund of the City of Monroe had the following account balances as of January 1, 2017: Debits Credits Cash $28,000 Due from other funds 27,000 Inventory of supplies 27,500 Land 18,000 Buildings 84,000 Accumulated depreciation- buildings $30,000 Equipment 46,000 Accumulated depreciation- equipment 25,000 Accounts payable 19,000 Advance from water utility fund 30,000 Net position 126,500 Totals $230,500 $230,500 Required: a. Open a general journal for the City of Monroe Stores and Service Fund and record the following transactions. (1) A budget was prepared for FY 2017. It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven for the year. (2) The amount due from other funds as of January 1, 2017, was collected in full. (3) During the year, supplies were ordered and received in the amount of $307,000. This amount was posted to accounts payable. (4) $15,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged.

Answer 1

Answer has been provided below
(a) Journal S.NO Particulars Debit ($) Credit ($) 2 27000 27000 3 307000 307000 | 30000 30000 Cash a/c Dr to Accounts receivable a/c (Being cash received from accounts receivable) Supplies a/c Dr to Accounts payable a/c (Being supplies purchased) Advance from water utility fund a/c Dr to Cash a/c (Being advance repaid) General fund a/c Water utility fund a/c Dr to Inventory a/c (Being supplies issued to general fund and water utility fund) Purchases a/c Warehousing a/c Delivery a/c Administrative expenses a/c to Accounts payable a/c (Being expenses incurred during the year) 250560 46400 296960 15000 16900 17500 9000 58400

. 360000 310000 50000 8 365000 Cash a/c Dr to General fund a/c to water utility fund a/c (Being cash received from general fund and water utility fund) Accounts payable a/c to Cash a/c (Being accounts payable paid in cash) Depreciation a/c to Accumulated depreciation - buildings a/c to Accumulated depreciation - equipment a/c (Being depreciation provided) 365000 Dr 14600 10000 4600

Stores and Service fund a/c Particulars Amount ($) Particulars To Net Position 5400 by Balance b/d To Balance c/a 121100 126500! Amount ($) 126500 126500

c). Closing entries S.No Particulars 1 Net Position a/c Dr To Supplies a/c To Purchases a/c To Warehousing a/c To Delivery a/c To Administrative expenses a/c (Being all expenses transferred to Net Position) Debit ($) Credit ($) 365400 307000 15000 16900 17500 9000 310000 50000 General fund a/c Water utility fund a/c To Net position a/c (Being sales for the year transferred to net position) 360000