On January 1, 2020, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable
Question:
On January 1, 2020, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $80,000 matures each January 1 starting in 2021. The debt will be serviced through a special tax levy designed especially for this purpose. Therefore, transfers will be provided as needed from the Special Revenue Fund.
The following transactions occurred relating to the Debt Service Fund.
2020
June 29 A transfer of $36,000 was received from the Special Revenue Fund.
July 1 The semiannual interest payment was made.
Dec. 18 A Special Revenue Fund transfer of $20,000 was received.
2021
Jan. 1 A payment on bond principal and semiannual interest was made.
2031
Jan. 2 Accumulations in the Debt Service Fund amounted to $55,000 in investments and $40,000 in cash. The investments were liquidated at face value and the final interest and principal payment was made.
Jan. 4 Having served its purpose, the Debt Service Fund’s remaining assets were transferred to the Special Revenue Fund.
Required:
Prepare the journal entries necessary to record the foregoing transactions.
Face ValueFace value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Step by Step Answer:
20 20 June 29 Cash Transfer from Special Revenue Fund To record transfer received 36000 36000 J...View the full answer
