Chapter 4, Problem 25EP

The following transactions affected various funds and activities of the Town of Big Springs.

1. 1. The Fine Department, a governmental activity accounted for within the General Fund, purchased $100,000 of water from the Water Utility Fund, an enterprise fund.
2. 2. A special revenue fund was awarded a $250,000 reimbursement grant. The General Fund advances $50,000 to the special revenue fund to cover initial costs associated with the grant’s purpose.
3. 3. The General Fund transferred its annual contribution of $100,000 to the debt service fund for interest and principal on general obligation bonds due during the year.
4. 4. The $5,000 balance in the capital projects fund at the completion of construction of a new Town Hall was transferred to the General Fund.
5. 5. The General Fund made a long-term loan in the amount of $50,000 to the Central Stores Fund, an internal service fund that services town departments.

   Required

6. a.      Make the required journal entries in the general journal of the General Fund and any other fund(s) affected by the interfund transactions described. Also make entries in the governmental activities journal as needed. Do not make entries in the subsidiary ledgers.
7. b.      Why is it unnecessary to make entries in a business-type activities journal for any transaction(s) affecting enterprise funds?