Journal entries for an Internal Service FundArlington Town uses an Internal Service Fund to account for its motor pool activities. You have thefollowing information:Automobiles: The Motor Pool uses two 6-passenger vans, each costing $78,750and each estimated to have a 5-year life when they were acquired in 2020.Driver salaries: The Motor Pool has a driver-administrator, who earns $78,750a year, and a driver, who earns $61,250.The town uses a rate of 35 percent (to cover benefits, including pensions)for planning purposes.Insurance: In 2020, the town purchased a 3-year automobile accident policyat a cost of $10,500.Fuel and maintenance costs: Based on experience, the driver-administratorestimates that total fuel and maintenance costs for the year will be $14,000.Billing units: To simplify its record keeping, the Motor Pool charges a fixed priceper trip. Arlington's budget office estimates it will provide 1,400 trips to thetown's departments in 2021.Arlington Town had the following transactions and events during January 2021:1. Paid salaries for the month in cash. (Driver-administrator and driver)2. Paid $1,100 cash for fuel and maintenance expenses3. Recorded depreciation expense for the month.4. Accrued benefits expense for the month5. Recorded insurance expense for the month6. Billed for motor vehicle services as follows: General Fund. 140 trips: Golf Course Enterprise Fund, 18 trips.Using the information above, prepare journal entries for the January transactions.If an entry affects more than one debit or credit account, enter the accounts in order ofmagnitude (largest to smallest balances), debits first.Round any calculations to the nearest dollar.AccountDebitCreditTo record salaries paid in January.To record fuel and maintenance costs paid in January.To record January depreciation expense.To record insurance expense for January.To record January employee benefits expense.To record billings in January for motor vehicle services.> >>>> >>

Answered: Driver salaries: The Motor Pool has a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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