Journal entries and financial statements for an Internal Service Fund Lilly County, faced with the prospect...
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Journal entries and financial statements for an Internal Service Fund Lilly County, faced with the prospect of declining revenues, decides it can save money by doing all printing in-house. The county creates the Lilly Printing Fund (an Internal Service Fund), directs departments to fulfill their bulk printing needs through that Fund, and directs departments to pay the Fund promptly to minimize its operating cash flow needs. The Fund had the following transactions and events during 2018. Prepare (a) journal entries to record these transactions in the Lilly Printing Fund; (b) a statement of net position as of December 31, 2018; and (c) a statement of revenues, expenses, and changes in fund net position for the year ended December 31, 2018. 1. Received a $6,000 loan on January 2 from the county's General Fund to be repaid in four equal annual installments of $1,500, starting December 31, 2018, with interest at the rate of 1 percent per annum on the outstanding balance. The specified purpose of the loan is to allow the Lilly Printing Fund to purchase equipment for $4,800 and to use the balance of $1,200 to meet operating cash flow needs. 2. Purchased reproduction equipment for $4,800 on January 2, using cash provided. The equipment has an estimated useful life of 4 years. 3. Purchased paper and supplies for $4,500 on credit. (Because inventories are kept to a minimum, charge the purchase to Supplies expense) 4. Sent invoices of $65,000 for printing services to departments financed by the General Fund. 5. Received cash in the amount of $63,000 as a result of Transaction 4. 6. Paid the $4,500 invoice received in Transaction 3. 7. Paid salaries in the amount of $50,000 and utility bills in the amount of $6,000. 8. Repaid the county $1,500 of principal on the loan, plus interest of 1 percent. 9. In preparation for year-end financial statements, recorded annual depreciation on its reproduction equipment. Journal entries and financial statements for an Internal Service Fund Lilly County, faced with the prospect of declining revenues, decides it can save money by doing all printing in-house. The county creates the Lilly Printing Fund (an Internal Service Fund), directs departments to fulfill their bulk printing needs through that Fund, and directs departments to pay the Fund promptly to minimize its operating cash flow needs. The Fund had the following transactions and events during 2018. Prepare (a) journal entries to record these transactions in the Lilly Printing Fund; (b) a statement of net position as of December 31, 2018; and (c) a statement of revenues, expenses, and changes in fund net position for the year ended December 31, 2018. 1. Received a $6,000 loan on January 2 from the county's General Fund to be repaid in four equal annual installments of $1,500, starting December 31, 2018, with interest at the rate of 1 percent per annum on the outstanding balance. The specified purpose of the loan is to allow the Lilly Printing Fund to purchase equipment for $4,800 and to use the balance of $1,200 to meet operating cash flow needs. 2. Purchased reproduction equipment for $4,800 on January 2, using cash provided. The equipment has an estimated useful life of 4 years. 3. Purchased paper and supplies for $4,500 on credit. (Because inventories are kept to a minimum, charge the purchase to Supplies expense) 4. Sent invoices of $65,000 for printing services to departments financed by the General Fund. 5. Received cash in the amount of $63,000 as a result of Transaction 4. 6. Paid the $4,500 invoice received in Transaction 3. 7. Paid salaries in the amount of $50,000 and utility bills in the amount of $6,000. 8. Repaid the county $1,500 of principal on the loan, plus interest of 1 percent. 9. In preparation for year-end financial statements, recorded annual depreciation on its reproduction equipment.
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Related Book For
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton
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