Interfund Premiums -- Actuarial estimates from previous fiscal year to determine $ necessary to establish a reserve for losses. It was determined that General Fund and water utility should be assessed a 6% fee of total wages/salaries.
Pub Safety 5,000,000
Gen Admin 1,500,000
Educ 1,500,000
Water Utility 2,500,000
What is journal entry?
To determine the journal entry for the interfund premiums assessment, you need to calculate the total amount to be assessed based on the 6% fee applied to the total wages/salaries of the General Fund and water utility. Here's how you can calculate it:
1. Calculate the total wages/salaries for the General Fund and water utility by summing their respective amounts:
General Fund wages/salaries = Pub Safety + Gen Admin + Educ = $5,000,000 + $1,500,000 + $1,500,000 = $8,000,000
Water Utility wages/salaries = $2,500,000
2. Apply the 6% fee to each of these amounts:
Interfund Premium for General Fund = 6% of General Fund wages/salaries = 0.06 * $8,000,000
Interfund Premium for Water Utility = 6% of Water Utility wages/salaries = 0.06 * $2,500,000
3. Calculate the total amount to be assessed by summing the individual interfund premiums:
Total Interfund Premium = Interfund Premium for General Fund + Interfund Premium for Water Utility
Once you have calculated the total amount to be assessed, you can create a journal entry to record this transaction. A possible journal entry might look like this:
Debit: Interfund Premium Expense - General Fund $___ (interfund premium for General Fund)
Debit: Interfund Premium Expense - Water Utility $___ (interfund premium for Water Utility)
Credit: Interfund Premium Revenue $___ (total interfund premiums assessed)
Note that the specific amounts will depend on the calculations made using the provided information. Additionally, consult with financial accounting and reporting guidelines specific to your organization to ensure accurate recording of the transaction.