On January 1, 2025, Crane issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $80,000 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 A transfer of $36,000 was received from the Special Revenue Fund. The semiannual interest payment was made. Dec. 18 2026 A Special Revenue Fund transfer of $20,000 was received. Jan. 1 A payment on bond principal and semiannual interest was made. 2035 Jan. 2 Jan. 4 Accumulations in the Debt Service Fund amounted to $61,000 in investments and $38,000 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 Fund's remaining assets were transferred to the Special Revenue Fund. Prepare the journal entries necessary to record the foregoing transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. List all debit. 2026 Jan. 1 Jan. 2 Jan. 4 Jan. 2 Jan. 4 Jan. 4 2035 Interest Expense Cash (To record interest and principal payment) Cash (To liquidate investments) Cash Investments (To make last bond principal and interest payment) Cash Investments (To close expenditures) Transfer from Special Revenue Fund Cash (To transfer remaining assets) Due to Special Revenue Fund Due from Debt Service Fund (To close remaining accounts) 36000 36000 80000 61000 99000 116000 3 3 8 11
On January 1, 2025, Crane issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $80,000 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 A transfer of $36,000 was received from the Special Revenue Fund. The semiannual interest payment was made. Dec. 18 2026 A Special Revenue Fund transfer of $20,000 was received. Jan. 1 A payment on bond principal and semiannual interest was made. 2035 Jan. 2 Jan. 4 Accumulations in the Debt Service Fund amounted to $61,000 in investments and $38,000 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 Fund's remaining assets were transferred to the Special Revenue Fund. Prepare the journal entries necessary to record the foregoing transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. List all debit. 2026 Jan. 1 Jan. 2 Jan. 4 Jan. 2 Jan. 4 Jan. 4 2035 Interest Expense Cash (To record interest and principal payment) Cash (To liquidate investments) Cash Investments (To make last bond principal and interest payment) Cash Investments (To close expenditures) Transfer from Special Revenue Fund Cash (To transfer remaining assets) Due to Special Revenue Fund Due from Debt Service Fund (To close remaining accounts) 36000 36000 80000 61000 99000 116000 3 3 8 11
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:On January 1, 2025, Crane issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and
principal of $80,000 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
A transfer of $36,000 was received from the Special Revenue Fund.
The semiannual interest payment was made.
Dec. 18
2026
A Special Revenue Fund transfer of $20,000 was received.
Jan. 1
A payment on bond principal and semiannual interest was made.
2035
Jan. 2
Jan. 4
Accumulations in the Debt Service Fund amounted to $61,000 in investments and $38,000 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 Fund's remaining assets were transferred to the Special Revenue Fund.
Prepare the journal entries necessary to record the foregoing transactions. (Credit account titles are automatically indented when amount
is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. List all debit.
Transcribed Image Text:2026
Jan. 1
Jan. 2
Jan. 4
Jan. 2
Jan. 4
Jan. 4
2035
Interest Expense
Cash
(To record interest and principal
payment)
Cash
(To liquidate investments)
Cash
Investments
(To make last bond principal
and interest payment)
Cash
Investments
(To close expenditures)
Transfer from Special Revenue Fund
Cash
(To transfer remaining assets)
Due to Special Revenue Fund
Due from Debt Service Fund
(To close remaining accounts)
36000
36000
80000
61000
99000
116000
3
3
8
11
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