Chapter 12 Problem 17

The Abby Arboretum (AA) has several programs, each of which has its own fund. AA also has several other important funds such as a Debt Service Fund and an Operating Fund (which handles all unrestricted transactions). For the following events, show the effect on the fundamental equation of accounting for each of the affected funds. a. The Environmental Program borrows money from the Operating Fund to hire a consultant for $10,000 The money is expected to be repaid in six months when a foundation giant is scheduled for receipt. b. AA transfers $20,000 to the Debt Service Fund, $2,000 of which is interest, to pay back a tax-exempt bond. c. AA charges out its Operations Department to each program equally, at $1,000 each, for services performed to maintain property, plant, and equipment