Introduction to Governmental & Not-for-Profit Accounting - Problem 7-3: Journal Entries for Several Funds and Statements for an Internal Service Fund

Problem 7-3: Journal Entries for Several Funds and Statements for an Internal Service Fund

(a) Journal Entries
1. In the General Fund:
Transfer out to Central Supplies Fund $75,000
Cash $75,000
To record transfer of initial capital to central supplies fund.

In the Internal Service Fund:
Cash $75,000
Transfer in from General Fund – capital contribution $75,000
To record transfer of initial capital from General Fund.

2. In the General Fund:
Encumbrances – equipment $34,000
Budgetary fund balance reserved for encumbrances $34,000
To record encumbrances for equipment.

3. In the Internal Service Fund:
Supplies $29,000
Accounts Payable $29,000
To record the purchase of supplies on credit.

4. In the Debt Service Fund:
Expenditures – interest $120,000
Matured interest payable $120,000
To record accrued matured interest.

Matured interest payable $120,000
Cash $120,000
To record payment of cash to fiscal agent for matured interest.

5. In the Internal Service Fund:
Due from departments $31,000
Revenues from sale of supplies $31,000
To record charges to departments for the sale of supplies.

Cost of sales $25,000
Supplies $25,000
To record sale of supplies.

6. In the Capital Projects Fund:
Construction contract payable $100,000
Cash $100,000
To record payment of amount currently due to contractor.

7. In the Internal Service Fund:
Office equipment $2,000
Note Payable $2,000
To record acquisition of office equipment by signing a 90-day note.