Debt Service Fund Transactions The City of Yuma, Arizona accounts for debt service related to its $10,000,000 face value, 5% general obligation term bonds, issued July 1, 2019, in a debt service fund. The city's accounting year ends on June 30. Interest on the bonds is due each December 31 and June 30. The following events occur in fiscal 2020; 1. The debt service fund budget called for $1,250,000 in transfers from the general fund, $20,000 in income on investments, and appropriations for the two semiannual interest payments. 2. The general fund transferred $1,250,000 to the debt service fund on August 15. The debt service fund invested the cash. 3. The debt service fund liquidated investments carried at $300,000 for $315,000 and made the December 31 interest payment. 4. The debt service fund liquidated investments carried at $270,000 for $260,000 and made the June 30 interest payment. 5. Dividend and interest income for the year, received in cash, was $45,000. 6. At June 30, 2020, the debt service fund's investments had a fair value of $660,000. Assume that all debt service fund resources are committed 4) > > >> 0 > > Required a. Prepare the journal entries to record the above events in the debt service fund. Include necessary closing entries. Debit Service Fund Journal Ref. Description Debit Credit 1. Estimated other financing sources 1,250,000 Estimated earnings 20,000 Appropriations 0 500,000 Fund balance-committed 0 770,000 2. Cash 1,250,000 0 Transfers in 0 1,250,000 To record transfer from General Fund. Investments 1,250,000 0 Cash 1,250,000 To record investment of transfer. 3. Cash 315,000 0 Investments 300,000 Realized gain on investments 15,000 To record liquidation of investment. Expenditure: interest 250,000 Cash 0 250,000 To record interest payment. 4. Cash 260,000 Realized loss on investments 10,000 Realized gain on investments 0 270,000 To record liquidation of investment Expenditure; interest 250,000 0 Cash 0 250,000 To record interest payment Cash 45,000 Investment income 45,000 Unrealized loss on investments 20,000 0 Investments 20,000 0 > ) >> 4 5. 4) > O 6. >>> 0 0 1,250,000 45,000 15,000 0 0 >> 0 Closing entries: Transfers in Investment income Realized gain on investments Realized loss on investments Unrealized losses on investments Estimated other financing sources Estimated earnings Fund balance-committed To close actual against budgeted revenues & other financing sources. Appropriations Expenditure: interest To close actual expenditures against appropriations 0 10,000 20,000 1,250,000 20,000 10,000 0 0 500,000 0 . 500,000 b. Prepare the debt service fund's statement of revenues, expenditures, and changes in fund balances and the year-end balance sheet for fiscal 2020. Use negative signs for answers to indicate "losses," "expenditures," and "excess of revenues under expenditures" - if applicable. City of Yuma, AZ Debt Service Fund Statement of Revenues, Expenditures, and changes in Fund Balances For the Year Ended June 30, 2020 Revenues Investment income 45,000 Realized gains (losses) 15,000 * Unrealized gains (losses) (30,000) * Net investment income 30,000 Expenditures Debt service interest 500,000 x Excess of revenues over (under) expenditures (470,000) Other financing sources (uses) Transfer in 1,250,000 Change in fund balance 780,000 Fund balance beginning Fund balance-ending 780,000 0 $ Assets Cash $ $ Investments Total assets $ City of Yuma, AZ Debt Service Fund Balance Sheet June 30, 2020 Fund balance 120,000 Fund balance-committed $ 780,000 660,000 780,000 Total fund balance $ 780,000