As of December 31, 2016, Sandy Beach had $9,500,000 in 4.5 percent serial bonds outstanding. Cash of $509,000 is the debt service fund’s only asset as of December 31, 2016, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments.Required:a. Prepare debt service fund and government-wide entries in general journal form to reflect, as necessary, the following information and transactions for FY 2017..(1) The
operating budget for FY 2017 consists of estimated revenues of $1,020,000 and
estimated other financing sources equal to the amount of interest to be paid in
FY 2017. Appropriations must be provided for interest payments and bond
redemptions on January 1 and July 1.
(2) Cash
was received from the General Fund and checks were written and mailed for the January
1 principal and interest payments.
(3) Property
taxes in the amount of $1,020,000 were levied (no estimate for uncollectible
accounts has been made)
(4) Property
taxes in the amount of $1,019,000 was collected
(5) Cash
was received from the General Fund and checks were written and mailed for the
July 1 principal and interest payments.
a-2. Prepare the closing entries.
(6) Adjusting
entries were made and uncollected taxes receivable were reclassified as
delinquent. At the fund level, entries were also made to close budgetary and
operating statement accounts. (Ignore closing entries in the government
activities journal.)
a.
Serial Bond Debt Service Fund; Record the entry
to close the budgetary statement account
b.
Record the entry to close the operating
statement account
c.
Record the entry for classifying uncollectible
accounts
2. Prepare a statement of revenues, expenditures, and
changes in fund balances for the debt service fund for the year ended December
31, 2017.
3. Prepare a balance sheet for the debt service as of December
31, 2017.
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