The Stores and Service Fund of the City of Monroe is responsible for purchasing office supplies for the Water and Sewer Department
as well as departments within the General Fund. Office supplies are ordered in bulk, to take advantage of favorable pricing. Office
supplies are then issued (sold) to departments at a markup intended to assure the Stores and Services Fund approximately breaks
even. The fund had the following account balances as of January 1, 2024:
Debits
Credits
Cash
$34,500
Due from Other Funds
27,000
Inventory of supplies
25,000
Land
18,000
Buildings
80,000
Accumulated Depreciation-Buildings
$41,500
Equipment
46,000
Accumulated Depreciation-Equipment
30,000
Accounts Payable
21,000
Advance from Water Utility Fund
30,000
Net Position
108,000
Totals
$230,500
$230,500
Required:
a. Record the following transactions.
1. In preparing for the FY 2024, the government desires the Stores and Services Fund revenues to approximately equal expenses.
It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven
for the year.
2. The amount due from other funds as of January 1, 2024, was collected in full.
3. During the year, supplies were ordered and received in the amount of $312,000. This amount was posted to accounts payable.
4. $15,000 of the advance from the Water Utility Fund, (originally provided for equipment), was repaid. No interest is charged.
5. During the year, supplies with a cost of $250,560 were issued (sold) to the General Fund, and supplies costing $46,400 were
issued to the Water Utility Fund. These funds were invoiced based on the previously determined markup ($313,200 to General
Fund and $58,000 to the Water Utility Fund)
Note: The Stores and Services Fund reports expenses within 3 categories;
• Cost of sales and services
• Administration
• Depreciation
6. Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Cost of Sales and Services
$45,500 and Administration, $18,500.
7. Cash was received from the General Fund in the amount of $310,000 and from the Water Utility Fund in the amount of $50,000.
8. Accounts payable were paid in the amount of $367,000.
9. Depreciation in the amount of $4,300 was recorded for buildings and $5,800 for equipment.
b. Post the entries to the Stores and Service Fund ledger (t-accounts).
c. Prepare an entry closing all nominal accounts to Net position. Compute the balance in the net position accounts, assuming there
are no Restricted Net position.
