Prepare Journal Entries in an Internal Service Fund of Union

question 7

Essay

Prepare journal entries in an Internal Service Fund of Union County to record each of the following transactions.
1.Purchased equipment on September 1,2014 by paying $25,000 down and borrowing $100,000 on a 6%,2-year note.
2.In 2014,billed General Fund $620,000 for services provided.Billings to the Enterprise Fund totaled $165,000.All billings were collected by December 31,2014 except for $100,000 charged to the General Fund.
3.Accrued year-end adjustments at December 31,2014 for interest expense and depreciation.The useful life of the equipment is 5 years with no salvage value.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a decreased cost per unit.

Long-Run Cost

The cost of production when all inputs, including both fixed and variable factors, can be fully adjusted, often leading to economies of scale.

Search Engine

A software system designed to carry out web searches, allowing users to find information on the Internet by typing queries.

Equal Percentage Increase

A situation where all variables increase by the same proportionate rate.