The City of Deshields establishes an Internal Service Fund (ISF) to provide limo
The City of Deshields establishes an Internal Service Fund (ISF) to provide limousine services to all City agencies. The Mayor’s office activity is recorded in the City’s General Fund. The ISF has concluded that each of its limousines should be billed out to the City at a rate of $150 per hour. Based on this information, prepare journal entries to record the following transactions in all of the appropriate City funds.
a. The City’s General Fund contributes $300,000 to the ISF to allow it to purchase limousines and set up operations.
b. The ISF purchases two used limousines for $190,000 in cash.
c. The Mayor spends the day at the state capitol representing the City in property tax hearings. Limousine A was used for 10 hours. The ISF bills the Mayor’s office for the service.
d. The head of the City’s Electric Utility Enterprise Fund and the City Controller attend a ribbon cutting ceremony celebrating the opening of the new electric plant. Both limousines were used for 7 hours each. The ISF bills the Mayor’s office and the EF for the service.
e. The Mayor’s office pays for the services billed to the General Fund in transactions c. and d.
f. The ISF pays $3,000 to its drivers for their services for the month.