Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 6, Problem 24EP
Term Bond Debt Service Fund Transactions. (LO6-5) On July 1, 2019, the first day of its 2020 fiscal year, the Town of Bear Creek issued at par $2,000,000 of 6 percent term bonds to renovate a historic wing of its main administrative building. The bonds mature in five years on July 1, 2024. Interest is payable semiannually on January 1 and July 1.
As illustrated in the table below, a sinking fund is to be established with equal semiannual additions made on June 30 and December 31. Cash for the sinking fund additions and the semiannual interest payments will be transferred from the General Fund shortly before the due dates. Investment earnings are added to the investment principal.
Required
Create a term bond debt service fund for the town and prepare
- a. On July 1, 2019, record the budget for the fiscal year ended June 30, 2020. Include all interfund transfers to be received from the General Fund during the year. An appropriation should be provided only for the interest payment due on January 1, 2020.
- b. On December 28, 2019, the General Fund transferred $234,461 to the debt service fund. The addition to the sinking fund was immediately invested in 6 percent certificates of deposit.
- c. On December 28, 2019, the city issued checks to bondholders for the interest payment due on January 1, 2020.
- d. On June 27, 2020, the General Fund transferred $234,461 to the debt service fund. The addition for the sinking fund was invested immediately in 6 percent certificates of deposit.
- e. Actual interest earned on sinking fund investments at year-end (June 30, 2020) was the same as the amount budgeted in the table. This interest adds to the sinking fund balance.
- f. All appropriate closing entries were made at June 30, 2020, for the debt service fund.
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On 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. For the year ended December 31, 2022, what is the amount that should be reported for “expenditures—matured interest” on the debt service fund’s statement of revenues, expenditures, and changes in fund balance?
A. $27,750.
B. $30,000.
C. $27,000.
D. $28,500.
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The Village of Hawksbill issued $5,900,000 in 5 percent general obligation, tax-supported bonds on July 1, 2019, at 101.
A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest
payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2020.
Hawksbill has a calendar fiscal year.
1. A capital projects fund transferred the premium (in the amount of $59,000) to the debt service fund.
2. On December 31, 2019, funds in the amount of $147,500 were received from the General Fund and the first interest
payment was made.
3. The books were closed for 2019.
4. On June 30, 2020, funds in the amount of $383,500 were received from the General Fund, and the second interest
payment ($147,500) was made along with the first principal payment ($295,000).
5. On December 31, 2020, funds in the amount of $140,125 were received from the General Fund and the third interest
payment was made (also in…
The Village of Hawksbill issued $4,000,000 in 5 percent general obligation, tax-supported bonds on July 1, 2019, at 102. A fiscal agent
is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December
31 and June 30. The first of 20 annual principal payments is to be made June 30, 2020. Hawksbill has a calendar fiscal year.
1. A capital projects fund transferred the premium (in the amount of $80,000) to the debt service fund.
2. On December 31, 2019, funds in the amount of $100,000 were received from the General Fund and the first interest payment was
made.
3. The books were closed for 2019.
4. On June 30, 2020, funds in the amount of $220,000 were received from the General Fund, and the second interest payment
($100,000) was made along with the first principal payment ($200,000).
5. On December 31, 2020, funds in the amount of $95,000 were received from the General Fund and the third interest payment was
made (also in…
Chapter 6 Solutions
Accounting For Governmental & Nonprofit Entities
Ch. 6 - Prob. 1QCh. 6 - What disclosures about long-term liabilities are...Ch. 6 - Prob. 3QCh. 6 - Prob. 4QCh. 6 - Although the most common type of general long-term...Ch. 6 - What is overlapping debt? Why would a citizen care...Ch. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - How are debt issuance costs accounted for at the...Ch. 6 - Under what circumstances might a government...
Ch. 6 - Prob. 11CCh. 6 - A citizens group in your state has placed an...Ch. 6 - A county government and a legally separate...Ch. 6 - Prob. 14CCh. 6 - Evaluating Legal Debt Margins. (LO6-2) Youll be...Ch. 6 - Prob. 17.1EPCh. 6 - Proceeds from bonds issued to construct a new city...Ch. 6 - The liability for long-term debt issued to finance...Ch. 6 - Which one of the following statements regarding...Ch. 6 - Prob. 17.5EPCh. 6 - On March 2, 2020, 20-year, 6 percent, general...Ch. 6 - Prob. 17.7EPCh. 6 - Prob. 17.8EPCh. 6 - The liability for special assessment bonds for...Ch. 6 - Total general long-term indebtedness subject to...Ch. 6 - Payment of general obligation bond interest would...Ch. 6 - Debt issuance costs a. Include legal and...Ch. 6 - If bonds are sold at a premium: a. The premium is...Ch. 6 - Prob. 17.14EPCh. 6 - Prob. 17.15EPCh. 6 - Prob. 18EPCh. 6 - Budgeted and Actual Debt Service Transactions....Ch. 6 - Lease Agreement. (LO6-5) McCormick County agreed...Ch. 6 - Legal Debt Margin and Direct and Overlapping Debt....Ch. 6 - Debt Service Fund Trial Balance. (LO6-5) Following...Ch. 6 - Prob. 23EPCh. 6 - Term Bond Debt Service Fund Transactions. (LO6-5)...Ch. 6 - Prob. 25EP
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