a.
Prepare debt service fund and government wide entries in general journal form to record the transactions.
a.
Explanation of Solution
Government wide financial statements: This statement provides an aggregated overview of the government net position and their changes in the net position. This statement reports on the government as a whole and assess whether the government has used the resources efficiently and effectively (operational accountability) to meet the operating objectives.
Prepare debt service fund and government wide entries in general journal form to record the transactions:
Date | Account Title and Explanation | PostRef. | Debit ($) | Credit ($) |
1. | Serial bond debt service fund: | |||
Estimated other financing sources | $416,250 | |||
Estimated revenue | $1,020,000 | |||
Appropriations | $1,416,250 | |||
Budgetary fund balance | $20,000 | |||
(To record the appropriations for interest payments and bond redemptions) | ||||
Governmental activities: | ||||
No entry. | ||||
2. | Serial bond debt service fund: | |||
Cash | $213,750 | |||
Other financing sources –inter fund transfers in | $213,750 | |||
(To record the receipt of cash from general fund) | ||||
Expenditures –Bond interest | $213,750 | |||
Expenditures –Bond principal | $500,000 | |||
Cash | $713,750 | |||
(To record the payment of interest expense and principal amount) | ||||
Governmental activities: | ||||
Interest Payable | $213,750 | |||
Bonds Payable | $500,000 | |||
Cash | $713,750 | |||
(To record the payment of interest expense and principal amount) | ||||
3. | Serial bond debt service fund: | |||
Taxes receivable-current | $1,020,000 | |||
Revenues | $1,020,000 | |||
(To record the property taxes levied) | ||||
Governmental activities: | ||||
Taxes receivable-current | $1,020,000 | |||
General Revenues- Property taxes | $1,020,000 | |||
(To record the property taxes levied) | ||||
4. | Serial bond debt service fund: | |||
Cash | $1,019,000 | |||
Taxes receivable-current | $1,019,000 | |||
(To record the property taxes levied) | ||||
Governmental activities: | ||||
Cash | $1,019,000 | |||
Taxes receivable-current | $1,019,000 | |||
(To record the property taxes levied) | ||||
5. | Serial bond debt service fund: | |||
Cash | $202,500 | |||
Other financing sources –inter fund transfers in | $202,500 | |||
(To record the receipt of cash from general fund) | ||||
Expenditures –Bond interest | $202,500 | |||
Expenditures –Bond principal | $500,000 | |||
Cash | $702,500 | |||
(To record the payment of interest expense and principal amount) | ||||
Governmental activities: | ||||
Interest on long term debt | $202,500 | |||
Bonds Payable | $500,000 | |||
Cash | $702,500 | |||
(To record the payment of interest expense and principal amount) | ||||
6. | Serial bond debt service fund: | |||
Budgetary fund balance | $20,000 | |||
Appropriations | $1,416,250 | |||
Estimated other financing sources | $416,250 | |||
Estimated revenue | $1,020,000 | |||
(To record the closing entry) | ||||
Taxes receivable—delinquent | $1,000 | |||
Taxes receivable—current | $1,000 | |||
(To record adjustment for uncollected taxes) | ||||
Revenues | $1,000 | |||
Deferred inflows of resources - unavailable revenues | $1,000 | |||
(To record the closing entry) | ||||
Other financing sources-inter fund transfers in | $416,250 | |||
Revenues | $1,019,000 | |||
Expenditures—bond interest | $416,250 | |||
Expenditures—bond principal | $1,000,000 | |||
Fund balance—restricted | $19,000 | |||
(To record the closing entry) | ||||
Governmental activities: | ||||
Expenses—interest on long–term debt | $191,250 | |||
Interest payable | $191,250 | |||
(To record the interest expense) | ||||
Taxes receivable—delinquent | $1,000 | |||
Taxes receivable—current | $1,000 | |||
(To record adjustment for uncollected taxes) |
Table (1)
b.
Prepare a statement of revenues, expenditures and changes in fund balances for the debt service fund for the year ended December 31, 2020.
b.
Explanation of Solution
Debt service fund: The debt service fund is a fund that provides government to account for transactions related with the payment of principle and interest on its liabilities or debt.
Prepare a statement of revenues, expenditures and changes in fund balances for the debt service fund for the year ended December 31, 2020:
Company SB | ||
Debt service fund | ||
Statement of revenues, expenditures and Changes in fund balances | ||
For the year ended December 31, 2020 | ||
Particulars | Amount | Amount |
Revenues: | ||
Property taxes | $1,019,000 | |
Expenditures: | ||
Bond interest | $416,250 | |
Bond principal | $1,000,000 | |
Less: Total expenditures | ($1,416,250) | |
Excess of expenditures under revenues | $397,250 | |
Other financing sources (uses): | ||
Inter fund transfers in | ($416,250) | |
Increase in fund balances | $19,000 | |
Fund balances, July 1, 2020 | $509,000 | |
Fund balances, December 31, 2020 | $528,000 |
Table (2)
c.
Prepare a
c.
Explanation of Solution
Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Prepare a balance sheet for the debt service fund for the year ended December 31, 2020:
Company SB | ||
Debt service fund | ||
Balance sheet | ||
As on December 31, 2020 | ||
Particulars | Amount | Amount |
Assets: | ||
Cash | $528,000 | |
Taxes receivable -delinquent | $1,000 | |
Total assets | $529,000 | |
Deferred inflows of resources: | ||
Unavailable revenues | $1,000 | |
Fund balances: | ||
Fund balance- restricted for debt service | $528,000 | |
Total deferred inflows of resources and fund balance | $529,000 |
Table (3)
Want to see more full solutions like this?
Chapter 6 Solutions
Loose-leaf For Accounting For Governmental & Nonprofit Entities
- As of December 31, 2022, Sandy Beach had $9,800,000 in 6.5 percent serial bonds outstanding. Cash of $433,000 is the debt service fund's only asset as of December 31, 2022, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each Interest payment date. Resources for payment of Interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments. Required b. Prepare a statement of revenues, expenditures, and changes in fund balances for the debt service fund for the year ended December 31, 2023. SANDY BEACH Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended December 31, 2023 Revenues: Appropriations Expenditures: Total Expenditures Excess of Expenditures Over Revenues Other Financing Sources (Uses): Increase in Fund Balance 0 0 0 Fund Balance, January 1, 2023 Fund Balance,…arrow_forwardAs of December 31, 2022, Sandy Beach had $9,600,000 in 5.5 percent serial bonds outstanding. Cash of $541,000 is the debt service fund's only asset as of December 31, 2022, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments. C. Prepare a balance sheet for the debt service fund as of December 31, 2023.arrow_forwardOn October 31, 2020, the Village of Lexington issued $1,000,000 of 3% general obligation serial bonds. The bonds pay interest on April 30 and October 31. Starting on October 31, 2021, the first of 20 equal annual serial payments of $50,000 was made. At December 31, 2022, what is the amount of accrued but unmatured interest that is not reported by the debt service fund? A. $4,875. B. $5,000. C. $4,500. D. $4,750.arrow_forward
- Ont/2/ 2021, the County of Santa Teresa issued a 20-year-life serial bond with a principal of $8,000,000 and 5% annual interest. Interests are paid on January 1 and July 1 with $400,000 in bonds being retired on each interest payment date. The debt service fund levies property taxes in the amount to cover interest and principal payments. Prepare entries for the Debt Service Fund for the following transactions. 1. Prepare the entries to record the budget for the debt service fund for Year 2021. 2. Prepare the entry to levy the property taxes. 3. Prepare the entry to pay the interest and principal on 7/1/2021.arrow_forward6. As of December 31, 2016, Rustaq New Town had OMR 9,500,000 in 4.5 percent serial bonds outstanding. Cash of OMR 509,000 is the debt service fund’s only asset as of December 31, 2016, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with OMR 500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund and the debt service fund levies property taxes in an amount sufficient to cover principal payments. Required Prepare debt service fund and government-wide entries in general journal form to reflect, as necessary, the following information and transactions for FY 2017. The operating budget for FY 2016 consists of estimated revenues of OMR 1,020,000 and estimated other financing sources equal to the amount of interest to be paid in FY 2017. Appropriations must be provided for interest payments and bond redemptions on January 1 and July 1.arrow_forward[The following information applies to the questions displayed below] As of December 31, 2022, Sandy Beach had $9,500,000 in 3 percent serial bonds outstanding. Cash of $509,000 is the debt service fund's only asset as of December 31, 2022, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments. > Show Transcribed Text cynnes b. Prepare a statement of revenues, expenditures, and changes in fund balances for the debt services December 31, 2023. Revenues Property Taxes SANDY BEACH Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended December 31, 2023 Expenditures Bond Interest Bond Principal Show Transcribed Text Required information Expenditures: PON Bond…arrow_forward
- On January 1, 2021, COVID Hospital issued a P250,000, 10 percent, 5-year bond for P231,601. Interest is payable on June 30 and December 31. Felipe uses the effective-interest method to amortize all premiums and discounts. The effective interest rate was 12 percent based on your inquiry with the bank and other financial institution for the same transaction . The accounting department recorded interest expense of P12,500for the fiscal year ended JUNE 30, 2021. How much interest expense must be adjusted to correct the interest expense recorded as of June 30, 2021? Answer in figures, ignore peso sign.arrow_forwardOn January 1, 2025. Pharoah issued $870,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $87.000 matures each January 1 starting in 2026. The debt will be serviced through a special tax levy designed especially for this purpose. Therefore, transfers will be provided as needed from the Special Revenue Fund. The following transactions occurred relating to the Debt Service Fund. 2025 June 29 July 1 Dec. 18 2026 Jan. 1 Your answer is partially correct. 2035 Jan. 2 Jan. 4 A transfer of $39,150 was received from the Special Revenue Fund. The semiannual interest payment was made. A Special Revenue Fund transfer of $21,000 was received. Date A payment on bond principal and semiannual interest was made. Accumulations in the Debt Service Fund amounted to $58,000 in investments and $37.000 in cash. The investments were liquidated at face value and the final interest and principal payment was made. Having served its purpose, the Debt Service…arrow_forwardOn January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment ANAS!! 1 2 1. 2. 3. 38 39 48 Cash Payment 216,000 216,000 230,997 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234, 246 216,000 216,000 216,000 Effective Increase in Interest Balance 280,008 282,568 285,230 Face amount Initial selling price Term to maturity 14,997 15,597 16,221 16,869 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 17,544 18,246 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 64,008 66,568 69,230 4. Interest is determined by what approach? 5. Annual interest rate 6. Effective annual interest rate 7. Total cash interest paid 8. Effective interest expense Outstanding Balance 5,774,920 5,789,917 6. What is the effective…arrow_forward
- Hi, I'm stuck on these questions. I need explanations, thanks. On January 1, 2021, Vacation Destinations issues $37 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) (2) (3) (4) (5) Cash Paid Interest Increase in Carrying Date for Interest Expense Carrying Value Value 1/1/2021 $ 34,485,790 6/30/2021 $ 1,295,000 $ 1,379,432 $ 84,432 34,570,222 12/31/2021 1,295,000 1,382,809 87,809 34,658,031 What is the original issue price of the bonds? What is the stated annual interest rate? What is the market annual interest rate? What is the total cash paid for interest assuming the bonds mature in 10 years?arrow_forwardOn January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment CashPayment EffectiveInterest Increase inBalance OutstandingBalance 7,218,650 1 270,000 288,746 18,746 7,237,396 2 270,000 289,496 19,496 7,256,892 3 270,000 290,276 20,276 7,277,168 4 270,000 291,087 21,087 7,298,255 5 270,000 291,930 21,930 7,320,185 6 270,000 292,807 22,807 7,342,992 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 270,000 350,010 80,010 8,830,251 39 270,000 353,210 83,210 8,913,461 40 270,000 356,539 86,539 9,000,000 5. What is the stated annual interest rate?6. What is the effective annual interest rate?7. What is the total cash interest paid over the term to maturity?8. What is the total effective…arrow_forwardSun City issues $47 million of bonds on January 1, 2021 that pay interest semiannually on June 30 and December 31. A portion of the bond amortization schedule appears below: Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01/01/2021 $51,324,372 06/30/2021 $2,350,000 $2,309,597 $40,403 51,283,969 12/31/2021 2,350,000 2,307,779 42,221 51,241,748 1. Were the bonds issued at face amount, a discount, or a premium? multiple choice Discount Premium Face amount 2. What is the original issue price of the bonds? Original price 3. What is the face amount of the bonds? Face amount 4. What is the stated annual interest rate? (Hint: Be sure to provide the annual rate rather than the six-month rate.) Stated annual interest rate % 5. What is the market annual interest rate? (Hint: Be sure to provide the annual rate rather than the six-month rate.)…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education