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The following transactions occurred regarding the Central Purchasing Fund, an Internal Service Fund. Record the entries for the transactions, and identify the fund(s) used. 1. The General Fund transferred $100,000 as a capital contribution to establish the fund. 2. The Central Purchasing Fund bills $200,000 for services it provided to other funds. 3. The Central Purchasing Fund incurred depreciation expense of $50,000 and paid $250,000 in operating expenses. 4. The General Fund subsidized the operations of the Purchasing Fund by transferring an additional $100,000 to the fund.

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Answer:

1.GF

Dr Transfer out to Internal Service Fund—contributed capital $100,000

Cr Cash $100,000

ISF

Dr Cash $100,000

Cr Transfer in from General Fund—contributed capital $100,000

2.ISF

Dr Due from other funds $200,000

Cr Revenues--charges for services$200,000

No entries

3.ISF

Dr Operating expenses $300,000

Cr Cash $250,000

Cr Accumulated depreciation $50,000

4. GF

Dr Transfer out to Internal Service Fund—contributed capital $100,000

Cr Cash $100,000

ISF

Dr Cash $100,000

Cr Transfer in from General Fund—contributed capital $100,000

Explanation:

Preparation of the Journal entries to Record the entries for the transactions, and identify the fund

1.GF

Dr Transfer out to Internal Service Fund—contributed capital $100,000

Cr Cash $100,000

ISF

Dr Cash $100,000

Cr Transfer in from General Fund—contributed capital $100,000

2.ISF

Dr Due from other funds $200,000

Cr Revenues--charges for services$200,000

No entries reason been that the exercise did not mention the user funds.

3.ISF

Dr Operating expenses $300,000

($250,000+$50,000)

Cr Cash $250,000

Cr Accumulated depreciation $50,000

4. GF

Dr Transfer out to Internal Service Fund—contributed capital $100,000

Cr Cash $100,000

ISF

Dr Cash $100,000

Cr Transfer in from General Fund—contributed capital $100,000

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