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Akron Established an Internal Service Fund for Its Data Processing

question 3

Essay

Akron established an internal service fund for its data processing activities on July 1,2008.During the fiscal year ended June 30,2009,the following transactions and events occurred:
1)On July 1,2008,the city council authorized the general fund to contribute $1,000,000 to help establish the internal service fund on July 20,2008.
2)The internal service fund spent $900,000 of the contribution to acquire a mainframe computer on July 25,2008.
3)During the year ended June 30,2009,the internal service billed other funds of the city $300,000 for use of the computer.By year end,all of the billings were collected except for $30,000.
4)The internal service fund incurred general operating expenses of $100,000,exclusive of depreciation,during the year ended June 30,2009.All of the expenses were paid by June 30,2009,except for $24,000.
5)Depreciation expense related to the computer was $180,000.
Required:
A)Prepare all journal entries that would be recorded by Akron's internal service fund for the year ended June 30,2009.Explanations for journal entries are not necessary.
B)Prepare a statement of revenues,expenses,and changes in fund net assets for the internal service fund for the year ended June 30,2009.
C)Calculate the amount of unrestricted net assets at June 30,2009.

Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Operating Expenses

Costs related to the primary activities of a business, excluding costs of goods sold.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor.

Net Sales

The amount of revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.