The City of Bingham utilizes a single debt service fund to account for the service of all issues of tax$-$supported and special assessment long$-$term debt. As of December $31,2022,$ one issue of tax$-$supported serial bonds was outstanding.

The post$-$closing trial balance of the debt service fund as of December $31,2022,$ is shown below. The $3\%,$ $$5,000,000$ tax$-$supported serial bonds were issued on June $30,2021$ at $2\mathrm{.}75\%.$ $$4,250,000$ remains outstanding on December $31,2022.$ Bonds of this issue mature in the amount of $$250,000$ on June $30$ and December $30$ of each year. Interest is also paid on these dates. The cash balance of the debt service fund on December $31,2022,$ is restricted for the repayment of tax$-$supported bond principal and interest payments.

a$.$ Record the following accounts and balances in the debt service fund general journal, selecting $2022$ from the $[$Year$]$ menu and using $6$a for the $[$Add description$].$ When completed select $[$Post entries$]$ to post the entries in the general ledgers. $($Note: These opening balances were previously recorded in the governmental activities general journal in Chapter $2$ of this project.$)$

CITY OF BINGHAM

Debt Service Fund

Trial Balance

As of December $31,2022$

Debits Credits

Cash $ $950,000$

Taxes Receivable$$Delinquent $87,625$

Allowance for Uncollectible Delinquent

Taxes $ $7,450$

Interest and Penalties Receivable on Taxes $5,915$

Allowance for Uncollectible Interest and

Penalties $532$

Deferred Inflows of Resources $85,558$

Fund Balance$$Restricted $950,000$

Totals $$1,043,540$ $$1,043,540$

Additional Information:

On April $1,2023,$ the City of Bingham sold a $10-$year issue of tax$-$supported serial bonds to finance the construction and equipping of an annex to City Hall. As described in Chapter $5$ of this cumulative problem, the total amount of bonds issued on that date was $$7,500,000,$ sold at $$7,550,225($an effective interest rate of $1\mathrm{.}875\%).$ The issue bears interest at the annual rate of $2$ percent, payable on April $1$ and October $1$ of each year; bonds in the amount of $$375,000$ will mature on April $1,2024,$ and every six months thereafter until maturity. The premium on these bonds will be amortized using the effective interest method. Cash for the payment of interest in $2023$ will be provided by the General Fund $($see Chapter $4).$

$.[$Para$.6$b$-1]$ From the data given about the bond issue already outstanding on January $1,2023,$ and the City Hall Annex Construction Fund bond issue projected to be sold on April $1,$ city officials adopted a legal budget for the fiscal year ended December $31,2023.$

Required: Record the budget for the Bingham Debt Service Fund for year $2023.$ Budgetary entries have no effect on the government$-$wide accounting records. The budget provides for estimated revenues of $$704,000$ from property taxes, $$2,000$ of interest and penalties on taxes, and $$5,000$ of earnings on investments. It also provides for estimated other financing sources for premiums on bonds of $$50,000$ and interfund transfers in from the General Fund of $$75,000.$ Appropriations associated with the $3\%$ bond provide for the $$250,000$ payments of bond principal maturing on June $30$ and December $30,$ as well as the associated bond interest payments due on those dates $([\mathrm{.}03$ X $6/12$ X $$4,250,000]+[\mathrm{.}03$ X $6/12$ X $$4,000,000].$ The new $2\%$ bond issuance will require an interest payment on October $1[\mathrm{.}02$ X $6/12$ X $$7,500,000]).$

$[$Para$.6$b$-5]$ Current taxes receivable were collected in the amount of $$695,500.$ Also, delinquent taxes receivable were collected in the amount of $$9,900,$ along with Interest and Penalties Receivable on Taxes of $$630.$

Required: Record these transactions in both the debt service fund and governmental activities journals. Remember to recognize revenue in the debt service fund for the delinquent taxes and interest and penalties collected by reducing the deferred inflows of resources.

$[$Para$.6$b$-6]$ Checks were written and mailed to bondholders for principal and interest payable on June $30,2023.$

Required: Record this transaction in both the debt service fund and governmental activities journals. In the governmental activities journal, reduce the premium on bonds payable by $$4,709$

$9.[$Para$.6$b$-9]$ On October $1,$ the debt service fund received $$75,000$ from the General Fund for interest payment on the $2\%$ serial bonds. Checks were written and mailed to bondholders for the interest payment due October $1,2023.$

Required: Record the transfer in the debt service fund and the interest payment in both the debt service fund and governmental activities journals. At the government$-$wide level, reduce the premium on bonds payable by $$4,217.$

$11.[$Para$.6$b$-11]$ On December $30,$ the debt service fund made the principal and interest payments associated with the $3\%$ serial bond.

Required: Record this transaction in both the debt service fund and governmental activities journals. In the governmental activities journal, reduce the premium.