Question

The Village of Hawksbill issued $4,700,000 in 5 percent general obligation, tax-supported bonds on July 1, 2019, at 102. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2020. Hawksbill has a calendar fiscal year 1. A capital projects fund transferred the premium in the amount of $94,000) to the debt service fund. 2. On December 31, 2019, funds in the amount of $117,500 were received from the General Fund and the first interest payment was made. 3. The books were closed for 2019 4. On June 30, 2020, funds in the amount of $258,500 were received from the General Fund, and the second interest payment ($117,500) was made along with the first principal payment ($235,000). 5. On December 31, 2020, funds in the amount of $111,625 were received from the General Fund and the third interest payment was made (also in the amount of $111.625) 6. The books were closed for 2020.

Answer 1

Answer:

1). a. Journal Entry

Village of Hawksbill
Debt Service Fund
General Journal
No.	Account	Debit	Credit
2019
1	No entry for bond sale- recorded in capital projects fund
	Cash	94000
	Other financing source-transfer in		94000
	A capital projects fund transferred the premium ($94000) to the debt service fund.
2	Cash	117500
	Other financing source-transfer in		117500
	[ Calculation    =4,700,000*5%*6/12 = 117,500]
	Expenditures-interest	117500
	Cash		117500
	On 12/31/19, funds in the amount of $117500 were received from the General Fund and the 1st interest payment was made
3	Other financing sources-transfers in	211500
	Expenditures-interest		117500
	Fund Balance		94000
	Books were closed for 2019.
2020 4	Cash	258500
	Other financing sources-transfers in		258500
	Expenditures-interest	117500
	Expenditures-Principal	235000
	Cash		352500
	On 6/30/20, funds in the amount of $258500 were received from the General Fund and the second interest payment ($117500) was made along with the first principal payment (235000).
5	Cash	111625
	Other financing sources-transfers in		111625
	Expenditures-interest	111625
	Cash		111625
	On 12/31/20, funds in the amount of $111625 were received from the General Fund and the third interest payment was made (111625) [Calculation :(4700000-235000)*5%*6/12 = 111,625]
6	Other financing sources-transfers in	370125
	Fund Balance	94000
	Expenditures-interest		229125
	Expenditures-Principal		235000
	Books were closed in 2020.

Statement of Revenues, Expenditures and changes in Fund Balance
Year ended December 2019
Revenues:
Total Revenues	0
Debt Service Expenditure:
Interest	117,500
Principal	0
	117,500
Excess(Deficiency) of Revenues over expenditure	-117,500
Other financing Sources:
Transfer In:	211,500
Total Change in fund balance	94,000
Fnd balance - january 2019	0
Fund balance - December 2019	94,000

b. Statement of Revenues, Expenditures and changes in Fund Balance

Statement of Revenues, Expenditures and changes in Fund Balance
Year ended December 2020
Revenues:
Total Revenues	0
Debt Service Expenditure:
Interest	229,125
Principal	235,000
	464,125
Excess(Deficiency) of Revenues over expenditure	-464,125
Other financing Sources:	370,125
Total Change in fund balance	-94,000
Fnd balance - january 2020	94,000
Fund balance - December 2020	0

2). a. Journal Entry

Village of Hawksbill
Debt Service Fund
General Journal
No.	Account	Debit	Credit
2019
1	No entry for bond sale- recorded in capital projects fund
	Cash	104000
	Other financing source-transfer in		104000
	A capital projects fund transferred the premium ($104000) to the debt service fund.
2	Cash	130000
	Other financing source-transfer in		130000
	[Calculation    =5,200,000*5%*6/12 = 130,000]
	Expenditures-interest	130000
	Cash		130000
	On 12/31/19, funds in the amount of $130000 were received from the General Fund and the 1st interest payment was made
3	Other financing sources-transfers in	234000
	Expenditures-interest		130000
	Fund Balance		104000
	Books were closed for 2019.
2020 4	Cash	286000
	Other financing sources-transfers in		286000
	Expenditures-interest	130000
	Expenditures-Principal	260000
	Cash		390000
	On 6/30/20, funds in the amount of $286000 were received from the General Fund and the second interest payment ($130000) was made along with the first principal payment (260000).
5	Cash	123500
	Other financing sources-transfers in		123500
	Expenditures-interest	123500
	Cash		123500
	On 12/31/20, funds in the amount of $123500were received from the General Fund and the third interest payment was made (123500) [ Calculation =(5200000-260000)*5%*6/12 = 123,500]
6	Other financing sources-transfers in	409500
	Fund Balance	104000
	Expenditures-interest		253500
	Expenditures-Principal		260000
	Books were closed in 2020.

b. Statement of Revenues, Expenditures and changes in Fund Balance

Statement of Revenues, Expenditures and changes in Fund Balance
Year ended December 2019
Revenues:
Total Revenues	0
Debt Service Expenditure:
Interest	130,000
Principal	0
	130,000
Excess(Deficiency) of Revenues over expenditure	-130,000
Other financing Sources:
Transfer In:	234,000
Total Change in fund balance	104,000
Fnd balance - january 2019	0
Fund balance - December 2019	104,000

Statement of Revenues, Expenditures and changes in Fund Balance
Year ended December 2020
Revenues:
Total Revenues	0
Debt Service Expenditure:
Interest	253,500
Principal	260,000
	513,500
Excess(Deficiency) of Revenues over expenditure	-513,500
Other financing Sources:	409,500
Total Change in fund balance	-104,000
Fnd balance - january 2020	104,000
Fund balance - December 2020	0