Take Home PortionWishful Thinking (WT) School of Management is building a new facility on a piece of donated land. It receiveda generous cash donation from a local business to support the project, and now needs to borrow additional$10,000,000 to complete the project. Therefore WT School of Mgmt issued $10,000,000 of 6.00% 10-yearbonds. These bonds were issued on January 1, 20X1, and pay interest annually on each January 1. The bondsyield 7.00%. WT School of Mgmt incurred $600,000 in bond issue costs related to the bond sale (round up thecalculation to the nearest dollar).(a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costsincurred on January 1, 20X1THE(b) Prepare a bond amortization schedule up to and including January 1, 20X5, using the effective interestmethod (DateJan 1, X1InterestPaidInterestExpenseDisc/PremAmortizationBondCarryingValueJan 1, X2Jan 1, X3Jan 1, X4Jan 1, X52(c) Assume that on July 1, 20X4, WT School of Mgmt retires 75% of the bonds at a cost of $6,500,000 plus accruedinterest. Prepare journal entries to record this retirement (

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Answered: Take Home Portion Wishful Thinking (WT)…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 8RE

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Crimson City borrows $3,000,000 to build a new addition for city hall. During the year, they constructed the new addition spending $3,250,000. At what amount would the new addition be reported on the debt service fund's balance sheet? $3,000,000 $250,000 0 $3,250.000
Instructions:Prepare the journal entries for the capital projects fund and debt service fund. The capital projects fund records encumbrances.(Hint: Create two separate ledgers and clearly label them to keep the debt service journal entries separate from the capital project journal entries.) The Town of Balloons had the following transactions related to construction of a new library: 1/2/2020: A 20-year 4% general obligation bond with a face value of $6,000,000 was issued with a premium of $60,000. 1/2/2020: The premium was transferred to the debt service fund. 3/1/2020: A contract for construction was signed in the amount of $5,400,000 6/15/2020: Cash of $210,000 was transferred from the general fund to the debt service fund 7/1/2020: Interest of $120,000 and principal of $150,000 are paid on the library bonds. 12/1/2020: Received an invoice for construction completed to date in the amount of $4,700,000 12/15/2020: Paid the construction invoice, less 5% retention to assure any…
The Town of Presho had the following transactions related to the construction of a new courthouse. (a) 1/2/2020: 20 year 4% General Obligation Serial Bonds with a face value of $6,000,000 are issued at 101. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. (b) 3/1/2020: Land is purchased for a new courthouse at a cost of $250,000. (c) 3/1/2020: A contract is signed for construction of the new courthouse in the amount of $5,400,000. (d) 6/15/2020: Cash ($210,000) sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e) 7/1/2020: Interest ($120,000) and principal ($150,000) are paid on the courthouse fund serial bonds. (f) 12/1/2020: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $4,700,000. (g) 12/27/2020: $117,000 is…
the Shannon Township Debt Service Fund accumulates resources to pay its $2 million general obligation debt. The debt is payable in equal annual installments of principal over 10 years with 5% interest on the unpaid principal. Prepare journal entries to record the following transactions in the Debt Service Fund. 1. The Township levies a special property tax amounting to $500,000 to pay debt service on its long-term general obligation debt. 2. All the property taxes levied for debt service purposes are collected. 3. The Township invests $150,000 in a six-month certificate of deposit. 4. Debt service (interest of $100,000 and principal of $200,000) becomes due to bondholders. 5. The certificate of deposit in c. matures and the Township receives a total of $153,000, which includes $3,000 of interest.
(B) The City of Presho had the following transactions related to the construction of a new courthouse. (1) 1/2/2017: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. (2) 3/1/2017: Land is purchased for a new courthouse at a cost of $300,000. (3) 3/1/2017: A contract is signed for construction of the new courthouse in the amount of $4,300,000. (4) 6/15/2017: Cash ($225,000) sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (5) 7/1/2017: Interest ($100,000) and principal ($125,000) are paid on the courthouse fund serial bonds. (6) 12/1/2017: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000. (7) 12/27/2017: $97,500…
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hrd.4
Margery Corp. received $100,000 in interest from a bank this year, $80,000 of municipal bond interest. Margery Corp. paid $5,000 of interest expense on loans it secured to purchase the municipal bonds. What is the total, net BTD associated with these investments? Group of answer choices $75,000 favorable, permanent $85,000 favorable, permanent $80,000 favorable, permanent $85,000 favorable, temporary
The following events occurred as part of the operations of Kronke Private University for the year 2018 (all amounts are in 000’s): a. To construct a new business building, the university floated at par a $20,000,000, 8% serial bond issued on July 1. Interest is to be paid on December 31 and June 30. In addition, contributions from the community specifically for the new building totaled $5,000,000. b. Payments for construction to date total $7,000,000. c. Interest payments are made on December 31. d. Construction of the building is completed at an additional cost of $18,000,000. Payment is made for $16,000,000; the balance will be paid in one year under a retained percentage agreement. Institutional policy is to release donor restrictions when assets are placed in service. e. The first bond serial payment of $2,000,000 plus interest is paid on December 31. f. A gift of land and a building was received, appraised at $200,000 and $350,000, respectively. The gift was made on the condition…
SITUATION: The University of Kentucky Builds with Bonds Every year, hundreds of colleges around the country build new buildings. Where do most schools get the money for these expensive projects? From long-term bonds. The University of Kentucky (UK) has issued “revenue” bonds to build buildings on the 23,000 student Lexington campus, and on 14 community colleges throughout the state. These bonds pledge the school’s revenues as collateral to guarantee payment of the bonds. At one time the outstanding debt on the Lexington campus buildings was $137 million. The total debt on the community college buildings equaled $121 million. The bonds generally have maturities ranging from 10 to 20 years. Additional “guarantees” for bond purchasers are the ratings given the bonds by professional rating agencies. Their bonds are rated “AA-“ by Standard & Poor’s Corporation, which is well above investment grade. Thee is always a very good market for the bonds. People in Kentucky…
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