Problem 1 (There are 13 journal entries required for the 10 transactions below. (Items 2, 6 and 8

require two journal entries.) Each journal entry is worth 3 points. Problem 1 is worth 39 points.)

Listed below are selected transactions from a San Bernardino County Debt Service Fund.

Prepare journal entries for the transactions. Type up your answers on the next page.

1. The remaining funds of a Capital Projects Fund in the amount of $10,000 were

transferred to the Debt Service Fund to be used in the repayment of debt and interest on

that debt that was issued to finance and expansion of the county casino.

2. The county General Fund transferred $25,000 to the Debt Service Fund to provide

financing for principal, interest, and fiscal agent fees for debt service transactions during

the year. $22,000 of the transfer from the General Fund and all of the transfer from the

Capital Projects Fund were invested.

3. The semi-annual payment of interest on bonds issued several years ago by a Capital

Projects Fund came due and was paid. The outstanding principal of these 15-year, 6%,

term bonds is $9,000. The bonds were issued 10 years ago on this date. Each time an

interest payment is made there is a requirement to also make a payment for fiscal agent

fees of $25, so this $25 was also paid.

4. The county has agreed to set up a small water treatment facility for the remote District 7,

now that the local water supply has been polluted by a hog farm upstream. The cost of the

facility, $20,000, is to be financed over 8 years by special assessments on the

homeowners in that district, although the debt is guaranteed by the county. The

assessment principal is paid annually, although the interest (6%) is paid semi-annually.

The first interest payment is due in 6 months, with the first principal payment due in one

year (60 days after year end). The water treatment facility will be operated as a general

government activity.

5. The annual payment of serial bonds issued 12 years ago by the county came due. The

amount owed is $2,000 in principal, $50 interest, and $25 in fiscal agent fees. The

amount due was paid.

6. The county received interest on its investments, $150. In addition, investments that

originally cost $12,000 were sold for $12,500. (See entry #2)

7. Another term bond issued 20 years ago by the county came due and was paid. The face

amount was $5,000 and the interest rate was 5%, and pays interest semi-annually. The

fiscal agent fees were $50.

8. The semi-annual payment for interest on the outstanding special assessment bonds was

paid when due. Also, $450 of assessments receivable has been collected for the principal

payment due next year. (See entry #4)

9. The regular semi-annual interest payment on the term bonds came due and was paid. (See

entry #3)

10. A serial bond issued in the current year has its first annual payment of principal and

interest due on the third day of the next fiscal year. As is required by the debt covenant

and following the general procedures for all debt issues of the county, $2,500 ($2,000 for

principal, 475 for interest, and $25 for fiscal agent fees) has been transferred from the

General Fund to the Debt Service Fund to make this payment.