P 20-8 Debt service fund journal entriesThe Town of Lilehammar has $3,000,000 of 6 percent bonds outstanding. Interest on the general obligation, general government indebtedness is payable semiannually each March 31 and September 30. December 31 is the fiscal year-end. Record the following transactions in the town’s debt service fund.Received a transfer from the general fund to provide financing for the March 31, interest payment.Paid the interest due on March 31.Received a transfer from the general fund to provide financing for the September 30, interest payment and retirement of $1,000,000 of the bonds.Paid the interest on September 31, and repaid $1,000,000 of the bonds.December 31 is the fiscal year-end. Record any appropriate adjustments.Received a transfer from the general fund to provide financing for the March 31 interest payment for year 2 of the bond.Paid the interest due on March 31 for year 2 of the bond.RequiredPrepare a statement of revenues, expenditures, and changes in fund balance for the Town of Lilehammar debt service fund for the year ended December 31, 2016.

Question
Asked Oct 15, 2019

P 20-8 Debt service fund journal entries

The Town of Lilehammar has $3,000,000 of 6 percent bonds outstanding. Interest on the general obligation, general government indebtedness is payable semiannually each March 31 and September 30. December 31 is the fiscal year-end. Record the following transactions in the town’s debt service fund.

  1. Received a transfer from the general fund to provide financing for the March 31, interest payment.

  2. Paid the interest due on March 31.

  3. Received a transfer from the general fund to provide financing for the September 30, interest payment and retirement of $1,000,000 of the bonds.

  4. Paid the interest on September 31, and repaid $1,000,000 of the bonds.

  5. December 31 is the fiscal year-end. Record any appropriate adjustments.

  6. Received a transfer from the general fund to provide financing for the March 31 interest payment for year 2 of the bond.

  7. Paid the interest due on March 31 for year 2 of the bond.

Required

Prepare a statement of revenues, expenditures, and changes in fund balance for the Town of Lilehammar debt service fund for the year ended December 31, 2016.

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Expert Answer

Step 1
Journal entries prepared under Debt service Fund:
Account titles and Explanation
Debit
Credit
No.
Date
Cash ($3,000,000*6%*6/12)
OFS-Nonreciprocal transfer from general fund
(To record transfer from general fund)
$90,000
1
$90,000
Expenditure - Interest
$90,000
2
$90,000
Cash
(To record interest payment)
Cash ($1,000,000+ $90,000)
$1,090,000
3
$1,090,000
OFS Nonreciprocal transfer from general fund
(To record transfer from general fund)
Expenditures - interest
Expenditures- Principal retirement
$90,000
4
$1,000,000
$1,090,000
Cash
(To record payment of principal and interest)
No journal entry required
5
Cash ($2,000,000* 6% *6/12)
$60,000
6
$60,000
OFS Nonreciprocal transfer from General fund
(To record transfer from generalfund)
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Journal entries prepared under Debt service Fund: Account titles and Explanation Debit Credit No. Date Cash ($3,000,000*6%*6/12) OFS-Nonreciprocal transfer from general fund (To record transfer from general fund) $90,000 1 $90,000 Expenditure - Interest $90,000 2 $90,000 Cash (To record interest payment) Cash ($1,000,000+ $90,000) $1,090,000 3 $1,090,000 OFS Nonreciprocal transfer from general fund (To record transfer from general fund) Expenditures - interest Expenditures- Principal retirement $90,000 4 $1,000,000 $1,090,000 Cash (To record payment of principal and interest) No journal entry required 5 Cash ($2,000,000* 6% *6/12) $60,000 6 $60,000 OFS Nonreciprocal transfer from General fund (To record transfer from generalfund)

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