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Incorporate the Internal Service Fund

The city of Brookville maintains its books to prepare fund accounting statements. It prepares worksheet adjustments in order to prepare government-wide statements. As such, Brookville's internal service fund--a print shop fund--is included in the proprietary funds statements.

Required: Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities:

a. Balance sheet accounts include: Cash, $100,000; Inventories, $400,000; Capital Assets, $1,000,000; Accumulated Depreciation, $500,000; Accounts Payable, $150,000; Bonds Payable, $500,000, Net Assets, $350,000.

b. The only transaction in the internal service fund that is external to the government is interest income in the amount of $15,000.

c. Exclusive of the interest expense, the internal service fund reported net income of $48,000. An examination of the records indicates that services were provided as follows: one half to general government, one-fourth to public safety, one fourth to culture and recreation.

Solution Summary

Incorporate and internal service funds are examined. The necessary adjustments in order to incorporate the internal service funds in the government-wide statements are provided.

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