Suppose the City of St. George, Utah, decides to assist residents by installing sidewalks in their neighborhood. Construction will be financed by cash provided from a ten-year, 3 percent, serial bond issue for which the government has no liability. Bonds mature at a rate of $500,000 per year. Area residents are assessed over a ten-year period to cover bond principal and interest payments. Events are as follows: 1. Serial bonds are issued, totaling $5,000,000. 2. Assessments are levied on area residents to cover the first year's principal and interest payments. 3. Assessments are collected and the first year's bond principal and interest are paid. Required Record the above events in a custodial fund. If a journal entry isn't required for an event, select No entry as your journal descriptions. Ref. Description 1 No entry No entry Debit Credit 0 0 0 0 To record issuance of serial bonds. 2 Additions Assessments receivable To record special assessment levy. 3 Cash Assessments receivable 5,500,000 × 0 03 500,000 x 5,500,000 x 0✔ 0~ 5,000,000 x To record collection of assessments. Deductions ÷ 0 x 0✓ Liabilities to bondholders 03 0x To record obligation to bondholders. Liabilities to bondholders ÷ 0x Cash ÷ 0✓ 0% To record payment of bond principal and interest.
Suppose the City of St. George, Utah, decides to assist residents by installing sidewalks in their neighborhood. Construction will be financed by cash provided from a ten-year, 3 percent, serial bond issue for which the government has no liability. Bonds mature at a rate of $500,000 per year. Area residents are assessed over a ten-year period to cover bond principal and interest payments. Events are as follows: 1. Serial bonds are issued, totaling $5,000,000. 2. Assessments are levied on area residents to cover the first year's principal and interest payments. 3. Assessments are collected and the first year's bond principal and interest are paid. Required Record the above events in a custodial fund. If a journal entry isn't required for an event, select No entry as your journal descriptions. Ref. Description 1 No entry No entry Debit Credit 0 0 0 0 To record issuance of serial bonds. 2 Additions Assessments receivable To record special assessment levy. 3 Cash Assessments receivable 5,500,000 × 0 03 500,000 x 5,500,000 x 0✔ 0~ 5,000,000 x To record collection of assessments. Deductions ÷ 0 x 0✓ Liabilities to bondholders 03 0x To record obligation to bondholders. Liabilities to bondholders ÷ 0x Cash ÷ 0✓ 0% To record payment of bond principal and interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Suppose the City of St. George, Utah, decides to assist residents by installing sidewalks in their neighborhood. Construction will be financed by
cash provided from a ten-year, 3 percent, serial bond issue for which the government has no liability. Bonds mature at a rate of $500,000 per
year. Area residents are assessed over a ten-year period to cover bond principal and interest payments. Events are as follows:
1. Serial bonds are issued, totaling $5,000,000.
2. Assessments are levied on area residents to cover the first year's principal and interest payments.
3. Assessments are collected and the first year's bond principal and interest are paid.
Required
Record the above events in a custodial fund.
If a journal entry isn't required for an event, select No entry as your journal descriptions.
Ref.
Description
1
No entry
No entry
Debit
Credit
0
0
0
0
To record issuance of serial bonds.
2
Additions
Assessments receivable
To record special assessment levy.
3
Cash
Assessments receivable
5,500,000 ×
0
03
500,000 x
5,500,000 x
0✔
0~
5,000,000 x
To record collection of assessments.
Deductions
÷
0 x
0✓
Liabilities to bondholders
03
0x
To record obligation to bondholders.
Liabilities to bondholders
÷
0x
Cash
÷
0✓
0%
To record payment of bond principal and interest.
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