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, $1,000,000 of the cash from the sale of the bonds is invested for one year at a rate of 126% Earnings on the investment are available for construction of the city hall annex 4. July 1 the first interest payment is due 5, December 31 adjusting entries are prepared Required: For the five related transactions provided, prepare all necessary journal entries for the affected funds and at the governmental activities level. Clearly indicate the fund journal or the government-wide journal in which the entry is being recorded of no antry is required for a transaction/event, select "No Journal Entry Required" in the first account field)
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, $1,000,000 of the cash from the sale of the bonds is invested for one year at a rate of 126% Earnings on the investment are available for construction of the city hall annex 4. July 1 the first interest payment is due 5, December 31 adjusting entries are prepared Required: For the five related transactions provided, prepare all necessary journal entries for the affected funds and at the governmental activities level. Clearly indicate the fund journal or the government-wide journal in which the entry is being recorded of no antry is required for a transaction/event, select "No Journal Entry Required" in the first account field)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text: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 available for construction of the city hall annex
4. July 1 the first interest payment is due
5. December 31 adjusting entries are prepared.
Required:
For the five related transactions provided, prepare all necessary journal entines for the affected funds and at the governmental
activities level. Clearly indicate the fund journal or the government-wide journal in which the entry is being recorded of no entry is
required for a transaction/event, select "No Journal Entry Required" in the first account field)
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