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The Corruna Township Debt Service Fund accumulates resources to pay its $1 million general obligation debt. The debt is payable in equal annual installments of
The Corruna Township Debt Service Fund accumulates resources to pay its $1 million general | ||||
obligation debt. The debt is payable in equal annual installments of principal over 10 years with | ||||
4% interest on the unpaid principal. | ||||
Prepare journal entries to record the following transactions in the Debt Service Fund. | ||||
1. The Township levies a special property tax amounting to $800,000 to pay debt service on its | ||||
long-term general obligation debt. The tax must be accounted for in the Debt Service Fund. | ||||
2. All the property taxes levied for debt service purposes are collected. | ||||
3. The Township invests $100,000 in a six-month certificate of deposit. | ||||
4. Debt service (principal and interest) becomes due and payable. | ||||
5. The certificate of deposit in transaction 3 matures and the Township receives a total of $104,000. | ||||
6. The debt service liabilities are paid. |
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