Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 6, Problem 19EP
Budgeted and Actual Debt Service Transactions. (LO6-2, LO6-5) The City of Amarillo is authorized to issue $8,000,000, 3 percent regular serial bonds in 2020 for the construction of a new exit off the interstate highway within city limits. The bonds mature in equal annual amounts beginning on January 1, 2021, for 10 years and pay interest on January 1 and July 1. The city is required to use all accrued interest and premiums to service the debt. The funds to pay the interest will be transferred from the General Fund. The county’s fiscal year-end is December 31.
Required
- a. Prepare the budgetary entries for 2020 assuming that the bonds were scheduled to be issued on January 2. Assume that the January 1, 2021, principal and interest payments will be included in the 2021 budget.
- b. The bonds were sold on February 1, 2020, at 101. Prepare the
journal entries needed to record the issuance of the bonds, including the entries required in the debt service fund and any entries required in the governmental activities general ledger at the government-wide level. - c. Prepare the entry required to reflect the transfer of funds from the General Fund to the debt service fund. (You may ignore the entry in the General Fund.)
- d. Prepare the journal entries needed to record the first interest payment made on July 1, including the entries required in the debt service fund and any entries required in the governmental activities general ledger at the government-wide level. Assume that the straight-line method is used for premium amortization.
- e. What, if any, adjustments would need to be made to the debt service fund or the governmental activities general ledger at the government-wide level during the fiscal year?
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The City of Amarillo is authorized to issue $9,000,000, 5 percent regular serial bonds in 2023 for the construction of a new exit off the interstate highway within city limits. The bonds mature in equal annual amounts beginning on January 1, 2024, for 10 years and pay interest on January 1 and July 1. The city is required to use all accrued interest and premiums to service the debt. The funds to pay the interest will be transferred from the General Fund. The county’s fiscal year-end is December 31.Prepare the budgetary entries for 2023 assuming that the bonds were scheduled to be issued on January 2. Assume that the January 1, 2024, principal and interest payments will be included in the 2023 budget. Prepare the entry required to reflect the transfer of funds from the General Fund to the debt service fund. (You may ignore the entry in the General Fund.)
The City of Dylan issues a 10-year bond payable of $1 million at face value on the first day of Year 1. Debt issuance costs of $10,000 are paid on that day. For government-wide financial statements, how is this debt issuance cost reported?
$1,000 is recorded as an expense and $9,000 is recorded as an asset.
$1,000 is recorded as an expense and $9,000 is recorded as a deferred outflow of resources.
$10,000 is recorded as an expense.
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The following information relates to Redwood City during its fiscal year ended December 31, 2019:a. On October 31, 2019, to finance the construction of a city hall annex, Redwood issued 8%, 10-year general obligation bonds at their face value of $600,000. Construction expenditures during the period equaled $364,000.b. Redwood reported $109,000 from hotel room taxes, restricted for tourist promotion, in a special revenue fund. The fund paid $81,000 for general promotions and $22,000 for a motor vehicle.c. 2019 general fund revenues of $104,500 were transferred to a debt service fund and used to repay $100,000 of 9%, 15-year term bonds and $4,500 of interest. The bonds were used to acquire a citizens’ center.d. At December 31, 2019, as a consequence of past services, city firefighters had accumulated entitlements to compensated absences valued at $140,000. General fund resources available at December 31, 2019, are expected to be used to settle $30,000 of this amount, and $110,000 is…
Chapter 6 Solutions
Accounting For Governmental & Nonprofit Entities
Ch. 6 - Prob. 1QCh. 6 - What disclosures about long-term liabilities are...Ch. 6 - Prob. 3QCh. 6 - Prob. 4QCh. 6 - Although the most common type of general long-term...Ch. 6 - What is overlapping debt? Why would a citizen care...Ch. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - How are debt issuance costs accounted for at the...Ch. 6 - Under what circumstances might a government...
Ch. 6 - Prob. 11CCh. 6 - A citizens group in your state has placed an...Ch. 6 - A county government and a legally separate...Ch. 6 - Prob. 14CCh. 6 - Evaluating Legal Debt Margins. (LO6-2) Youll be...Ch. 6 - Prob. 17.1EPCh. 6 - Proceeds from bonds issued to construct a new city...Ch. 6 - The liability for long-term debt issued to finance...Ch. 6 - Which one of the following statements regarding...Ch. 6 - Prob. 17.5EPCh. 6 - On March 2, 2020, 20-year, 6 percent, general...Ch. 6 - Prob. 17.7EPCh. 6 - Prob. 17.8EPCh. 6 - The liability for special assessment bonds for...Ch. 6 - Total general long-term indebtedness subject to...Ch. 6 - Payment of general obligation bond interest would...Ch. 6 - Debt issuance costs a. Include legal and...Ch. 6 - If bonds are sold at a premium: a. The premium is...Ch. 6 - Prob. 17.14EPCh. 6 - Prob. 17.15EPCh. 6 - Prob. 18EPCh. 6 - Budgeted and Actual Debt Service Transactions....Ch. 6 - Lease Agreement. (LO6-5) McCormick County agreed...Ch. 6 - Legal Debt Margin and Direct and Overlapping Debt....Ch. 6 - Debt Service Fund Trial Balance. (LO6-5) Following...Ch. 6 - Prob. 23EPCh. 6 - Term Bond Debt Service Fund Transactions. (LO6-5)...Ch. 6 - Prob. 25EP
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