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 2021: 1. Received a $12,000 loan on January 2 from the county’s General Fund to be repaid in four equal annual installments of $3,000, starting December 31, 2021, 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 $9,600 and to use the balance of $2,400 to meet operating cash flow needs. 2. Purchased reproduction equipment for $9,600 on January 2, using cash provided. The equipment has an estimated useful life of 4 years. 3. Purchased paper and supplies for $9,000 on credit. (Because inventories are kept to a minimum, charge the purchase to Supplies expense.) 4. Sent invoices of $130,000 for printing services to departments financed by the General Fund. 5. Received cash in the amount of $126,000 as a result of Transaction 4. 6. Paid the $9,000 invoice received in Transaction 3. 7. Paid salaries in the amount of $100,000 and utility bills in the amount of $12,000. 8. At the end of the year, repaid the county $3,000 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. a) Prepare journal entries to record these transactions in the Lilly Printing Fund. If an entry affects more than one debit or credit account, enter the accounts in order of magnitude (largest to smallest balances), debits first. Round any calculations to the nearest dollar. b) Prepare a statement of net position as of December 31, 2021. Enter all amounts as positive numbers. c) Prepare a statement of revenues, expenses, and changes in fund net position for the year ended December 31, 2021. Enter operating expenses in order of magnitude (largest to smallest amounts).
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
The Fund had the following transactions and events during 2021:
1. Received a $12,000 loan on January 2 from the county’s General Fund to be repaid in four
equal annual installments of $3,000, starting December 31, 2021, 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 $9,600 and to use the balance of $2,400
to meet operating cash flow needs.
2. Purchased reproduction equipment for $9,600 on January 2, using cash provided.
The equipment has an estimated useful life of 4 years.
3. Purchased paper and supplies for $9,000 on credit. (Because inventories are kept to a minimum,
charge the purchase to Supplies expense.)
4. Sent invoices of $130,000 for printing services to departments financed by the General Fund.
5. Received cash in the amount of $126,000 as a result of Transaction 4.
6. Paid the $9,000 invoice received in Transaction 3.
7. Paid salaries in the amount of $100,000 and utility bills in the amount of $12,000.
8. At the end of the year, repaid the county $3,000 of principal on the loan, plus interest of 1 percent.
9. In preparation for year-end financial statements, recorded annual
reproduction equipment.
a) Prepare
If an entry affects more than one debit or credit account, enter the accounts in order of
magnitude (largest to smallest balances), debits first.
Round any calculations to the nearest dollar.
b) Prepare a statement of net position as of December 31, 2021.
Enter all amounts as positive numbers.
c) Prepare a statement of revenues, expenses, and changes in fund net position
for the year ended December 31, 2021.
Enter operating expenses in order of magnitude (largest to smallest amounts).
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