On April 1, 2019, Houghton City issued 10-year, 3 percent serial, general obligation bonds at a face amount of 2,000,000. Interest is due semi-annually on April 1 and October 1. The first payment of $200,000 for redemption of principal is due April 1, 2020. The city has a calendar year end of December 31. Record the interest that should be recognized for the calendar year end December 2019 in two ways: first, for the governmental activities on the government-wide statement of activities, and second, for the General Fund on the statement of revenues, expenditures, and changes in fund balance. Assume cash is paid on the day interest is due. Show your calculations. Explain why interest expense is treated differently in those two statements. Date Account Name Debit Credit

On April 1, 2019, Houghton City issued 10-year, 3 percent serial, general obligation bonds at a face amount of 2,000,000. Interest is due semi-annually on April 1 and October 1. The first payment of $200,000 for redemption of principal is due April 1, 2020. The city has a calendar year end of December 31. Record the interest that should be recognized for the calendar year end December 2019 in two ways: first, for the governmental activities on the government-wide statement of activities, and second, for the General Fund on the statement of revenues, expenditures, and changes in fund balance. Assume cash is paid on the day interest is due. Show your calculations. Explain why interest expense is treated differently in those two statements. Date Account Name Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The Village of Seaside Pines prepared the following enterprise fund Trial Balance as of December 31, 2020, the last day of its fiscal year. The enterprise fund was established this year through a transfer from the General Fund. Debits Credits Accounts payable $ 103,000 Accounts receivable $ 25,800 Accrued interest payable 28,900 Accumulated depreciation 46,500 Administrative and selling expenses 48,500 Allowance for uncollectible accounts 12,400 Capital assets 707,000 Cash 90,200 Charges for sales and services 553,000 Cost of sales and services 495,000 Depreciation expense 46,500 Due from General Fund 17,100 Interest expense 40,200 Interest revenue 4,300 Transfer in from General Fund 115,200 Bank note payable 625,300 Supplies inventory 18,300 Totals $ 1,488,600 $ 1,488,600…
In 2017 the voters of Solis City authorized the construction of a new swimming pool for a total cost of no more that $4 million. The voters also approved the issuance of $4 million of 20-year, 5% general obligation serial bonds to be repaid by a special property tax. Interest on these bonds is payable annually on June 30. On June 30, 2017, the city sold the bonds at 101 and signed contracts for the construction of the swimming pool. Principal payments of $200,000 are due each June 30, beginning in 2018. If the property tax revenue is not sufficient to make the necessary principal and interest payments, the city is obligated to transfer the necessary monies from the general fund to the debt service fund. The city does not formally incorporate budgetary entries in the debt service fund but it does use encumbrance accounting for control purposes. The city has a June 30 fiscal year-end. Assume that the city maintains its books and records in a manner that facilitates the preparation of…
On March 2, 2022, 20-year, 3 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 3 percent per annum is due semiannually on March 1 and September 1. The first payment of $150,000 for redemption of principal is due on March 1, 2023. Fiscal year-end occurs on December 31. What is the interest expenditure in the governmental funds for the fiscal year ending December 31, 2022?
Residents from the Town of Mountain View authorized a $8,100,000 renovation to their historic town hall on November 15, 2022. Financing for the project consists of $3,200,000 from a 3 percent serial bond Issue, $2,600,000 from a state grant, and $2,300,000 from the General Fund. Debt service for the serial bonds will be provided by a one-quarter-cent city sales tax imposed on every dollar of sales in the city. You may Ignore entries in the General Fund. The town has a calendar year-end. Required Prepare Journal entries to record the related transactions in the town's capital projects fund, debt service fund, and governmental activities at the government-wide level. (Do not round Intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Transaction Fund/Governmental Activities General Journal Debit Credit a. Record the 2023 budget for the Serial Debt Service Fund. Sales taxes of $340,000 are expected to be…
During 2019, the Zeppelin City Debt Service Fund paid $18100 towards general long-term debt principal and $4400 towards interest on general long-term debt. What amount will be reported as Expenditures for Debt Service for 2019? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. Your Answer: Answer
On July 1, 2020, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $4,400,000. The county estimated that 2 percent of the taxes levied would be uncollectible. As of April 30, 2021, the due date for all property taxes, the county had collected $4,090,000 in taxes. During the current fiscal year, the county collected $54,000 in delinquent taxes and $5,000 in interest and penalties on the delinquent taxes. The county imposed penalties and interest in the amount of $14,700 but only expects to collect $12,900 of that amount. At the end of the fiscal year (June 30, 2021), uncollected taxes, interest, and penalties are reclassified. They are not expected to be collected within the first 60 days for the following fiscal year. Required Record entries for the above transactions as stated in the individual statements below, and post corresponding information into the Revenues ledger as appropriate. Prepare journal entries to record the tax levy on July 1,…
The City of Jonesboro engaged in the following transactions during the fiscal year ended September 30, 2018. Record the following transactions related to interfund transfers. Be sure to indicate in which fund the entry is being made. a. The city transferred $400,000 from the general fund to a debt service fund to make the interest payments due during the fiscal year. The payments due during the fiscal year were paid. The city also transferred $200,000 from the general fund to a debt service fund to advance-fund the $200,000 interest payment due October 15, 2019. b. The city transferred $75,000 from the Air Operations Special Revenue Fund to the general fund to close out the operations of that fund. c. The city transferred $150,000 from the general fund to the city’s Electric Utility Enterprise Fund to pay for the utilities used by the general and administrative offices during the year. d. The city transferred the required pension contribution of $2 million from the general fund to the…
The following transactions relate to the City of Middleton, which has a fiscal year end of December 31, The city adopts budgets for the General Fund and the debt service fund. NOTE for simplicity, and contrary to GASB standards, assume straight-line amortization for this problem. 1. The City of Middleton sells a $2,000,000, 3%, 16-year general obligation bond issue on January 2 at par. The bond pays interest semiannually on July 1 and January 2, with the first principal payment scheduled for next year on January 2 A city hall annex must be constructed with the bond proceeds 2. Budgets are adjusted to account for the sale of the bond. The debt service fund budget should be adjusted to accommodate the new debt issue. If the debt service fund does not have sufficient resources to pay expenditures, the needed funds will be provided by the General Fund 3. On February 1, $1000,000 of the cash from the sale of the bonds is invested for one year at a rate of 126% Earnings on the investment are…
The board of commissioners of the City of Hartmoore adopts a general fund budget for the year ending June 30, 2024. It includes revenues of $1,250,000, bond proceeds of $612,500; appropriations of $927,500, and operating transfers out of $525,000. Required: a. If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? b. If this budget is formally integrated into the accounting records, what later entry is required? Complete this question by entering your answers in the tabs below. Required A Required B If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list
The City of Fremont's fiscal year ends June 30. The city issued the following general obligation bonds: 1. On July 1, 2017, the city issued 4 percent, $100,000 face value, 10-year bonds for $108,531, to yield 3 percent. Interest is payable on June 30 of each year. 2. On january 1, 2019, the city issued 2 percent, $100,000 face value, 10-year bonds for $91,470, to yield 3 percent. Interest is payable on December 31 of each year. a. Determine the amounts reported in the government-wide statement of activities and statement of net position for fiscal year 2020, related to the bonds. b. Determine the amounts reported in the governmental funds statement of revenues, expenditures, and changes in fund balances and balance sheet for fiscal year 2020, related to the bonds.
The citizens of Spencer County approved the issuance of $2,008,000 in 6 percent general obligation bonds to finance the construction of a courthouse annex. A capital projects fund was established for that purpose. The preclosing trial balance of the courthouse annex capital project fund follows: Trial Balance—December 31, 2020 Debits Credits Cash $ 908,000 Contract payable $ 551,000 Due from state government 192,000 Encumbrances 108,000 Expenditures—capital 1,854,000 Intergovernmental grant 395,000 OFS: premium on bonds 57,000 OFS: proceeds sale of bonds 2,008,000 Budgetary fund balance—Reserve for encumbrances 108,000 OFU: Transfer out 57,000 $ 3,119,000 $ 3,119,000 Required:a. Prepare any closing entries necessary at year-end.b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance…
Raygun County had outstanding $35 million in Series 1998 general obligation bonds on June 30, 2018. The bonds were issued at an interest rate of 10 percent with interest payable on June 30 and December 31. In July 2018, interest rates declined substantially, and the county issued refunding bonds in the amount of $35 million at 5 percent. The proceeds of the refunding bonds were placed in escrow along with $2,800,000 held in the county’s debt service fund as a sinking fund for the 1998 debt. The proceeds of the refunding bonds and the sinking fund amount would be used in December 2018 (the call date) to purchase the 1998 debt at a 3 percent call premium, totaling $1,050,000, plus accrued interest of $1,750,000. The County had $250,000 of unamortized debt issue costs on the 1998 bonds, which it reported in its government-wide financial statements. This amount combined with the call premium resulted in a $3,050,000 “loss” on the refunding. (a) What journal entries should the county make…