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Special Assessment Debt The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on
Special Assessment Debt | |||||||||
The City of Dayville has undertaken a sidewalk construction project. The project is being financed | |||||||||
by the proceeds from the issue on July 1, 2012, of $500,000 of 7% special assessment debt. One | |||||||||
quarter of the principal plus interest is payable on June 30 of each year beginning June 30, 2013. | |||||||||
Property owners are assessed to provide the funds to pay the principal and interest on the debt. | |||||||||
The following transactions occurred during the period July 1, 2012, through June 30, 2013. | |||||||||
1. The bonds for the construction of the sidewalks were issued at par value. | |||||||||
2. The sidewalks were completed at a cost of $500,000. | |||||||||
3. Property owners were assessed and billed for the first installment of principal and interest | |||||||||
on the special assessment debt. | |||||||||
4. Assessments for the first installment of principal and interest on the special assessment | |||||||||
debt were collected and the June 30, 2013, payment of principal and interest on the special | |||||||||
assessment debt was made. | |||||||||
Required: | |||||||||
Prepare all journal entries for the above transactions that are necessary in the funds of the | |||||||||
City of Dayville assuming that. | |||||||||
A. The City of Dayville has made a commitment to the holders of the special assessment debt | |||||||||
to assure the timely and full payment of principal and interest on the appropriate due dates. | |||||||||
B. The City of Dayville has not obligated itself in any manner on the special assessment debt | |||||||||
that was issued for the construction of the sidewalks. |
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