The Village of Hawksbill issued $4,000,000 in 5 percent general obligation, tax-

Question

The Village of Hawksbill issued $4,000,000 in 5 percent general obligation, tax-supported bonds on July 1, 2016, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2017. Hawksbill has a calendar fiscal year. 1. A capital projects fund transferred the premium (in the amount of $40,000) to the debt service fund. 2. On December 31, 2016, funds in the amount of $100,000 were received from the General Fund and the first interest payment was made 3. The books were closed for 2016. 4. On June 30, 2017, funds in the amount of $260,000 were received from the General Fund, and the second interest payment ($100,000) was made along with the first principal payment ($200,000). 5. On December 31, 2017, funds in the amount of $95,000 were received from the General Fund and the third interest payment was made (also in the amount of $95,000) 6. The books were closed for 2017. Required: a. Prepare journal entries to record the events above in the debt service fund. b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2016 c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2017

Explanation / Answer

(A)

Expenditure-Interest

(B)

(C)

General Journal No. Transaction General Journal Debit Credit 1. 1a No Journal entry required 2. 1b Cash $40000 Other Financing services-Transfer In $40000 3. 2a Cash $100000 Other Financing Resources-Transfer in $100000 4. 2b Expenditure-Interest $100000 Cash $100000 5. 3 Other Financing resource-Transfer In $140000

Expenditure-Interest

$100000 Fund Balance $40000 6. 4a Cash $260000 Other Financing resources-Transfer In $260000 7 4b Expenditure Interest $100000 Expenditure Principal $20000 cash $300000 8 5a Cash $95000 Other Financing resources-Transfer In $95000 9 5b Expenditure-Interest $95000 Cash $95000 10 6a Other Financing Resources-Transfer In $355000 Fund Balance $40000 Expenditure-Interest $195000 Expenditure-Principal $200000

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