ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
12th Edition
ISBN: 9781266379017
Author: Christensen
Publisher: INTER MCG
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Textbook Question
Chapter 18, Problem 18.9E
Interfund Transfers and Transactions
During 20X8, the following transfer and transactions between funds took place in the City of Matthew.
- On March 1. a $12,000 transfer was made from the general fund to establish a building maintenance internal service fund. Matthew uses transfer accounts for this type of transfer.
- On April 1, the general fund made an $8,000, six-month loan to the building maintenance service fund.
- On April 15, $2,400 was transferred from the general fund to the debt service fund to pay interest.
- On May 5, Matthew’s transportation service fund billed the general fund $825 for April services.
Required
- Prepare
journal entries for the general fund and the other fund invoked at the time of each transfer or transaction - For each transfer or transaction, prepare the appropriate closing entries for the general fund and the other fund involved for the year ended June 30, 20X8.
a.
Expert Solution
To determine
Introduction: Inter-fund transfer are made to fulfill the requirements of the specific fund and are closed at the end of the year. These funds are transferred from general fund account.General fund is the primary fund maintained by the companies for recording all inflows and outflows except which are associated with the special purpose funds. It is mostly the difference between assets and liabilities of the company’s fund.
The journal entries for general fund and other funds for various transfers made during the year.
Explanation of Solution
Journal entries in general fund account for the inter-fund transfers:
| Particulars | Amount ($) | Amount ($) |
| Building maintenance fund | 12000 | |
| To Cash | 12000 | |
| (Being transfer made to building maintenance internal service fund) | ||
| Loan to building maintenance fund | 8000 | |
| To cash | 8000 | |
| (Being loan given to building maintenance fund) | ||
| Debt service fund | ||
| To cash | 2400 | |
| (Being transfer to debt service fund for payment of interest) | 2400 | |
| Expenses | 825 | |
| To Transportation service fund | 825 | |
| (Being expenses incurred from transportation service fund) | ||
| Transportation service fund | 825 | |
| To cash | 825 | |
| (Being transportation service transfer from general fund) |
Journal entry in Building maintenance fund for the transfers made from general fund:
| Particulars | Amount ($) | Amount ($) |
| Cash | 12000 | |
| To general fund transfer | 12000 | |
| (Being transfer from general fund account) | ||
| Cash | 8000 | |
| To due from general fund | 8000 | |
| (Being loan received from general fund) |
Journal entry in debt service fund for the transfers made from general fund:
| Particulars | Amount ($) | Amount ($) |
| Cash | 2400 | |
| To general fund transfer | 2400 | |
| (Being transfer from general fund account) |
Journal entry in internal service fund for the billing made to general fund account:
| Particulars | Amount ($) | Amount ($) |
| Due from general fund | 825 | |
| To Revenue account | 825 | |
| (Being income due from general fund account) |
b.
Expert Solution
To determine
Introduction: Inter-fund transfer are made to fulfill the requirements of the specific fund and are closed at the end of the year. These funds are transferred from general fund account.General fund is the primary fund maintained by the companies for recording all inflows and outflows except which are associated with the special purpose funds. It is mostly the difference between assets and liabilities of the company’s fund.
The journal entries for closing general fund and other funds for various transfers made during the year.
Explanation of Solution
Closing entries for general fund account is as follows:
| Particulars | Amount ($) | Amount ($) |
| General fund-unreserved | 12000 | |
| To building maintenance fund | 12000 | |
| (Being entry for closing the building maintenance fund) | ||
| General fund-unreserved | 2400 | |
| To debt service fund | 2400 | |
| (Being entry to close debt service fund) | ||
| General fund-unreserved | 825 | |
| To transportation service fund | 825 | |
| (Being entry to close transportation service fund) |
Closing entry for building maintenance fund is as follows:
| Particulars | Amount ($) | Amount ($) |
| General fund transfer | 12000 | |
| To Net asset | 12000 | |
| (Being entry to close general fund) |
Closing entry for debt service fund is as follows:
| Particulars | Amount ($) | Amount ($) |
| General fund transfer | 2400 | |
| To Fund balance-unreserved | 2400 | |
| (Being closing entry for general fund balance) |
Closing entry for Internal service fund is as follows:
| Particulars | Amount ($) | Amount ($) |
| Revenues | 825 | |
| To Net assets | 825 | |
| (Being closing entry for internal service fund) |
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ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
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