Assume that the water utility, an enterprise fund, was billed $25,000 for data processing work during the year ended June 30, 20X7. What account in

the enterprise fund should be debited to record these billings?

a. Operating expenses.

b. Other Financing Use—Transfers Out.

c. Expenditures.

d. Due to Internal Service Fund.

On July 2, 20X6, the Village of Westbury established an internal service fund to service the data processing needs of the other village departments. The internal
service fund received a transfer of $600,000 from the general fund and a $100,000 long-term advance from the water utility enterprise fund to acquire computer
equipment. During July 20X6, computer equipment costing $650,000 was acquired. The following events occurred during the year ended June 30, 20X7:

At June 30, 20X7, all but $7,000 of the billings had been collected, and all operating expenses and the interest expense except for $3,000 of operating expenses had
been paid.

Transcribed Image Text:

Charges for services to other departments for data processing services rendered $100,000 Operating expenses (exclusive of depreciation expense) 45,000 Depreciation expense 40,000 Interest expense on the advance 5,000