The City of Amarillo is authorized to issue $3,600,000, 5 percent regular serial
ID: 2549839 • Letter: T
Question
The City of Amarillo is authorized to issue $3,600,000, 5 percent regular serial bonds in 2017 for the construction a new exit off the interstate highway within city limits. The bonds mature in equal annual amounts beginning on January 1, 2018 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.
The bonds were sold on February 1, 2017 at 102. 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. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Prepare the entry required to reflect the transfer of funds from the General Fund in the debt service fund. (You may ignore the entry in the General Fund.) (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Prepare the journal entries needed to record 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. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
The City of Amarillo is authorized to issue $3,600,000, 5 percent regular serial bonds in 2017 for the construction a new exit off the interstate highway within city limits. The bonds mature in equal annual amounts beginning on January 1, 2018 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.
Explanation / Answer
Transaction
General Journal
Debit
Credit
1
Debt Service Fund:
Estimated other financing sources- Transfer in
90,000
Appropriations
( 36,00,000 x 0.05 x 1/2)
90,000
b. The bonds were sold on February 1, 2017 at 102. 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.
Transaction
Fund
General Journal
Debit
Credit
1
Debt service fund
Cash
Other financing sources-bond premium
Revenues
Government securities
Cash
36,87,000
Bonds payable
36,00,000
Premium bonds payable(36,00,000x.02
72,000
Accrued interest payable(36,00,000 x0.05 x 1/12)
15,000
C. Prepare the entry required to reflect the transfer of funds from the General Fund in the debt service fund.
Transactions
Fund
General Journal
Debit
Credit
Debt service fund
Cash
3,000
Other financing sources-interfund transfer in
3,000
D. Prepare the journal entries needed to record 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.
Transactions
Fund
General Journal
Debit
Credit
Debt service fund
Expenditures - interest
90,000
Cash
90,000
Government securities
Interest payable
3,000
Premium on bonds payable
1800
Interest expenses
85,200
Cash
90,000
Transaction
General Journal
Debit
Credit
1
Debt Service Fund:
Estimated other financing sources- Transfer in
90,000
Appropriations
( 36,00,000 x 0.05 x 1/2)
90,000