copley essentials of accounting for governmental and notforprofit

57 The Village of Harris issued $5,000,000 in 6 percent general obligation, tax supported bonds on July 1, 2008, 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, 2009. Harris has a calendar fiscal year. 1. A capital projects fund transferred the premium ($50,000) to the debt service fund. 2. On December 31, 2008, funds in the amount of $150,000 were received from the General Fund and the first interest payment was made. 3. The books were closed for 2008. 4. On June 30, 2009, funds in the amount of $350,000 were received from the General Fund, and the second interest payment was made along with the first principal payment ($250,000). 5. On December 31, 2009, funds in the amount of $142,500 were received from the General Fund and the first interest payment was made. 6. The books were closed for 2009. a. Prepare journal entries to record the events above in the debt service fund.

5-11The Town of McHenry has $8,000,000 in general obligation bonds outstanding and maintains a single debt service fund for all debt service transactions. On July 1, 2012, a current refunding took place in which $8,000,000 in new general obligation bonds were issued. Record the transaction on the books of the debt service fund.

5-12.The City of Sharpesburg received a gift of $950,000 from a local resident on June 1, 2012, and signed an agreement that the funds would be invested permanently and that the income would be used to purchase books for the city library. The following transactions took place during the year ended December 31, 2012: 1. The gift was recorded on June 1. 2. On June 1, ABC Company bonds were purchased as investments in the amount of $950,000 (par value). The bonds carry an annual interest rate of 4.5 percent, payable semiannually on December 1 and June 1. 3. On December 1, the semiannual interest payment was received. 4. From December 1 through December 31, $18,000 in book purchases were made; full payment was made in cash. 5. On December 31, an accrual was made for interest. 6. Also, on December 31, a reading of the financial press indicated that the ABC bonds had a fair value of $956,000, exclusive of accrued interest. 7. The books were closed. Required: a. Record the transactions on the books of the Library Book Permanent Fund. b. Prepare a separate Statement of Revenues, Expenditures, and Changes in Fund Balances for the Library Book Permanent Fund for the Year Ended December 31, 2012.