he Town Debt Service Fund accumulates resources to pay its $3 million general obligation debt. The debt is payable in equal annual installments of principal over 20 years with 5% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund. The Town levies a special property tax amounting to $550,000 to pay debt service on its long-term general obligation debt. The tax must be accounted for in the Debt Service F
he Town Debt Service Fund accumulates resources to pay its $3 million general obligation debt. The debt is payable in equal annual installments of principal over 20 years with 5% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund. The Town levies a special property tax amounting to $550,000 to pay debt service on its long-term general obligation debt. The tax must be accounted for in the Debt Service F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Town Debt Service Fund accumulates resources to pay its $3 million general obligation debt. The debt is payable in equal annual installments of principal over 20 years with 5% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund.
The Town levies a special property tax amounting to $550,000 to pay debt service on its long-term general obligation debt. The tax must be accounted for in the Debt Service Fund.
All the property taxes levied for debt service purposes are collected.
The Town invests $250,000 in a six-month certificate of deposit.
Debt service (interest of $150,000 and principal of $150,000) becomes due and payable.
The debt service liabilities from 4. are paid.
The certificate of deposit in 3. matures and the Town receives a total of $261,000.
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