Question

- Akron established an internal service fund for its data processing activities on July 1, 20 During the fiscal year ended June 30, 20X9, the following transactions and events occurred 1) On July 1, 20X8, the city council authorized the general fund to contribute $1,000,000 to establish the internal service fund on July 20, 20X8. 2) The internal service fund spent $900,000 of the contribution to acquire a mainframe com on July 25, 20X8. 3) During the year ended June 30, 20X9, the internal service billed other funds of the city $300,000 for use of the computer. By year end, all of the billings were collected except for $30,000. 4) The internal service fund incurred general operating expenses of $100,000, exclusive of depreciation, during the year ended June 30, 20X9. All of the expenses were paid by June 31 20X9, except for $24,000 5) Depreciation expense related to the computer was $180,000. Required: A) Prepare all journal entries that would be recorded by Akron's internal service fund for the ended June 30, 20X9. Explanations for journal entries are not necessary. B) Prepare a statement of revenues, expenses, and changes in fund net assets for the internal service fund for the year ended June 30, 20X9. C) Calculate the amount of unrestricted net assets at June 30, 20X9.

Answer 1

	Journal of Akron Internal Service Fund
Date	Particulars	Debit	Credit
July,1,20X8	Cash A/c	10,00,000
	To General Fund A/c		10,00,000
July,25,20X8	Computers A/c	9,00,000
	To Cash A/c		9,00,000
June,30,20x9	Account Receivable A/c	3,00,000
	To Computer Hire Charges Received A/c		3,00,000
June,30,20x9	Cash A/c	2,70,000
	To Account Receivable A/c		2,70,000
June,30,20x9	Operating Expenses A/c	1,00,000
	To Accounts Payable A/c		1,00,000
June,30,20x9	Accounts Payable A/c	76,000
	To Cash A/c		76,000
June,30,20x9	Depreciation A/c	1,80,000
	To Accumulated Depreciation A/c		1,80,000

Akron Internal Service Fund's Income and Expenditure Account for year ending June,30,20x9
Particulars	Amount
Income
Computer Hire Charges Received	3,00,000
Total Income	3,00,000
Expenses
Operating Expenses	1,00,000
Depreciation	1,80,000
Total Expenses	2,80,000
Net Expenses over Income	20,000

Akron Internal Service Fund's Balance Sheet As on June,30,20x9
Liabilities	Amount	Amount
General Fund Account		10,00,000
Income Expenditure Account		20,000
Accounts Payable		24,000
Total Liabilities		10,44,000
Assets	Amount	Amount
Computer A/c	9,00,000
Less: Accumulated Depriciation A/c	1,80,000	7,20,000
Cash A/c		2,94,000
Accounts Receivable		30,000
Total Assets		10,44,000