Reference no: EM13575648

This is for government and not for profit governemtal accounting.
financial statements must be adjusted to ensure proper accounting of internal service fund activities.

sun city accounts for its telecommunication services in an internal service fund. in a recent year, its records indicated the following:
billings to units accounted for in governmental funds $400,000
billings to units accounted for in proprietary funds 100,000
year-end accounts receivable from units accounted for in governmental fund 25,000
year-end accounts receivable from units accounted for in proprietary fund 10,000

per city policy, the telecommunications department bills other departments for the actual cost of providing its services.

1. How is each of the following reported in the city's government-wide statement of net assets and statement of activities?

a. the billing of the internal service funf (and offsetting purchases of services by other funds)
b. the year end accounts receivable and payable

2. How is each of the following reported in the balance sheets and statement of revenues and expenditures or expenses of the individual government and proprietary funds to which the internal service fund provides services and of the internal service fund itself?
a. the billing from the internal service fund
b. the year-end accounts payable and receivable

3. Internal services funds are classified as proprietary funds. yet, in the government-wide statements, their assets and liabilities that have not been eliminated in the consolidation process are reported in the governmental activities column. How can you justify this apparent inconsistency?