Question: The following information was abstracted from a note headed Interfund

The following information was abstracted from a note, headed ‘‘Interfund Transactions,’’ to the financial statements of Independence, Missouri.
Interfund Charges for Support Services
Interfund charges for support services (which would otherwise be acquired from outsiders) and rent paid to the General Fund during the fiscal year were as follows:

Rent charges, which consist of leased office space and computer charges, are included in other revenue of the general fund.

Payments in Lieu of Taxes
The payments of $5,161,609, $628,371, and $880,637 in the fiscal year by the power and light, sanitary sewer, and water (enterprise) funds, respectively, to the general fund in lieu of taxes represent franchise taxes and real estate taxes on plants in service. The franchise tax rate, established by city ordinance at 9.08 percent for the year, is applied to gross billed operating revenues less amounts written off to arrive at the franchise tax due the general fund. Real estate taxes are charged at a set amount.

Interfund Operating Transfers
Interfund operating transfers for the fiscal year were as follows:

1. Based on the information provided, prepare four journal entries (for support services, rent, payments in lieu of taxes, and interfund operating transfers) to record the transfers into the general fund. Be sure the account titles you use make clear the nature of the transaction (e.g., revenue, reciprocal transfer, nonreciprocal transfer).
2. Justify any differences in how you classified the interfundtransactions.
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  • CreatedAugust 13, 2014
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