An internal service fund had the following transactions during the year ended June 30,20X9,its first year of existence:
(1)Received $1,000,000 contribution from the general fund.
(2)Acquired fleet of cars for $950,000,paying cash.
(3)Billed departments in other funds $500,000 for using cars.
(4)Incurred operating costs,exclusive of depreciation,of $240,000.
(5)Depreciation expense amounted to $250,000.
-Refer to the above information.On the internal service fund's balance sheet at June 30,20X9,net assets-unrestricted should be reported at:

Question

Quizplus · Accepted Answer

The net assets-unrestricted at year-end can be calculated as follows: Initial contribution ($1,000,000) minus the purchase of fleet cars ($950,000) plus revenue from billing departments ($500,000) minus operating costs ($240,000) minus depreciation expense ($250,000). This results in $1,000,000 - $950,000 + $500,000 - $240,000 - $250,000 = $60,000. However, the correct calculation should include the initial contribution and the net income, which is revenue minus expenses. The expenses include operating costs and depreciation, so the net income is $500,000 - $240,000 - $250,000 = $10,000. Adding this to the initial contribution, we get $1,000,000 + $10,000 = $1,010,000, indicating a mistake in the calculation provided in the choices. The correct approach to find the net assets-unrestricted involves considering all transactions affecting equity, but none of the provided choices accurately reflect the correct calculation based on the given transactions. Given the options, the closest incorrect choice provided is B) $310,000, which does not correctly follow from the transactions listed.

An Internal Service Fund Had the Following Transactions During the Year