Question
I need journal entries for the project city of smithville chap 6 & chap 9 the 17the edition. or at least chap 6 The City
I need journal entries for the project city of smithville chap 6 & chap 9 the 17the edition. or at least chap 6
The City of Smithville created a Street Improvement Bond Debt Service Fund to be usedto retire the bonds issued for the purposes described in Chapter 5 of this cumulativeproblem, and to pay the interest on the bonds. The $2,000,000 face value of bonds issuedduring 2017 are dated January 1, 2017, but were not issued until May 6, 2017. Becausebondholders will receive six months of interest on July 1, 2017 in the total amount of$40,000, they were required to pay $28,000 on the date of issue to pay the city forunearned interest from January 1 to May 6. The bonds bear interest of 4 percent perannum. The first interest payment of $40,000 is due July 1, 2017. Subsequentsemiannual interest payments will be made January 1 and July 1 of each following yearuntil the maturity of the bond. Bonds in the amount of $500,000 are to mature five yearsafter the date of the bonds (January 1, 2022), and $100,000 is to mature January 1 of eachyear thereafter until all the bonds have been retired. Thus, these bonds are deferred serialbonds as discussed in Chapter 6 of the textbook. Make entries as instructed in thefollowing paragraphs. As the bond issue was not made until May 2017, the city will notlevy debt service property taxes until next year.Bond covenants related to this bond issue require the city to levy property taxes sufficientto make principal and interest payments until the bonds have been retired. The city council has approved a resolution to enable the property tax levy, beginning in fiscal year2018.a.
[Para. 6-a-1] In early May 2017, an amendment to the annual budget for 2017was approved by the city council for inflows and outflows in the StreetImprovement Bond Debt Service Fund related to the bond issue. The debt servicefund budget amendment provides for estimated other financing sources of$42,000 for the premium on bonds sold and estimated revenues of $28,000 foraccrued interest on bonds sold; and appropriations in the amount of the oneinterest payment of $40,000 to be made during 2017. (The payment that is due onJuly 1, 2017.) Required: Record the amended budget for the Street Improvement Bond DebtService Fund for year 2017. Budgetary entries have no effect on the governmentwideaccounting records.2.
[Para. 6-a-2] On May 6, 2017, the premium and accrued interest on bonds soldwere received by the Street Improvement Bond Debt Service Fund. (SeeTransaction 5-a-3 in the Street Improvement Fund.)Required: Record this transaction in the Street Improvement Debt Service Fund.No entry is required at this time in the governmental activities general journalsince the bond issue, together with related premium and accrued interest, wasrecorded in the governmental activities general journal in transaction 5-a-3.3.
[Para. 6-a-3] The July 1, 2017, interest payment was made in the amount of$40,000. (Note: Since you credited ExpenseInterest on Long-Term Debt for$28,000 in 5-a-3 in the governmental activities general journal you can record thefull July 1, 2017, interest payment as a debit to Interest Expense, less amortizationof the premium.)
Required: Record this transaction in both the Street Improvement Debt Service Fund and the governmental activities general journals. For the entry in thegovernmental activities journal, assume that the appropriate amount ofamortization of the Premium on Deferred Serial Bonds Payable for the period thebonds have been outstanding (May 6 to July 1) is $585. (Note: Althoughpremiums and discounts on bonds issued are not amortized in a debt service fund,they should be amortized at the government-wide level since the accrual basis ofaccounting is used at that level.)4.
[Para. 6-a-4] Make the required journal entry in the governmental activities general journal to accrue six months of interest payable on the 4% deferred serialbonds from the July 1 interest payment until the end of the fiscal year, December 31, 2017. For this entry, assume that the appropriate amount of amortization ofthe Premium on Deferred Serial Bonds Payable is $1,750. (Recall that interest isnot accrued for the period July 1 to December 31, 2017 in the debt service fund asno appropriation exists for this expenditure and the interest is not due this fiscalyear.)
5. Verify the accuracy of journal entries, including dates and paragraph numbers,and, if you have not already done so, post all entries to the general ledger of boththe Street Improvement Bond Debt Service Fund and governmental activities byclicking on [Post Entries]. Make the entries needed to close the budgetary andoperating statement accounts at the end of fiscal year 2017. Make this entry onlyin the Street Improvement Debt Service Fund journal. Accounts should be closedto Budgetary Fund Balance and Fund BalanceRestricted, as appropriate. Besure that for each account being closed that the check mark for [Closing Entry] ison and that Closing Entry appears in the [Transaction Description] box. (Note: Closing entries for governmental activities at the government-wide levelwill be made in Chapter 9 of this cumulative problem.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started