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:

Condition Subsequent

A condition in a contract that, when it occurs, terminates an existing obligation, making the contract's terms no longer binding.

Al Gore

A former Vice President of the United States who has been notably active in raising awareness about global warming and environmental issues.

Substantial Performance Standard

A legal principle that if a party has largely fulfilled its obligations under a contract, with only minor breaches, it is entitled to payment, minus damages for the breaches.

Reasonable Person Standard

A legal standard used to determine how an average person would responsibly act in certain situations, applying an objective perspective.