Question

The Village of Hawksbill issued $4100,000 in 5 percent general obligation, tax-supported bonds on July 1, 2019, at 101. 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 are to made on June 30, 2020. Hawksbill has a calendar fiscal year.

1. A capital projects fund transferred the premium ( in the amount of $ 41,000) to the debt service fund.

2. On December 31, 2019, funds in the amount of $102,500 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 $266,500 were received from the General Fund and the second interest payment ($102,500) was made along with principal payment ( $205,000)

5. On December 31, 2020 funs in the amount of $ 97,375 were received from the General Fund and the third interest payment was made ( also in the amount of $ 97,375)

6.the books were closed for 2020

A. Prepare journal entries to record the events above in the debt service fund

B. Prepare a statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2019

C. Prepare a statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31 2020

Answer 1

A.

	General Journal	Debit	Credit
2019
1	No Entry For Bond Sale– Recorded In Capital Projects Fund
	Cash	41,000
	Other Financing Sources - Transfers In		41,000
2	Cash	102,500
	Other Financing Sources - Transfers In		102,500
	Expenditures-Interest	102,500
	Cash		102,500
3	Other Financing Sources - Transfers In	143,500
	Expenditures-Interest		102,500
	Fund Balance		41,000
2020
4	Cash	266,500
	Other Financing Sources - Transfers In		266,500
	Expenditures-Interest	102,500
	Expenditures-Principal	205,000
	Cash		307,500
5	Cash	97,375
	Other Financing Sources - Transfers In		97,375
	Expenditures-Interest	97,375
	Cash		97,375
6	Other Financing Sources - Transfers In	363,875
	Fund Balance	41,000
	Expenditures-Interest		199,875
	Expenditures-Principal		205,000

Calculation

Entry #2 :

2019 Expenditures-Interest = =4,100,000*5%*6/12 = 102,500

Entry #5 :

2020 Expenditures-Interest = (4,100,000 - 205,000) * 5% * 6/12 = 97,375

B.

Village Of Hawksbill
Statement Of Revenues, Expenditures, And Changes In Fund Balance Year Ended December 31, 2019
Revenues:
Total Revenues	0
Debt Service Expenditures:
Interest	102,500
Principal	0
Excess (Deficiency) Of Revenues Over Expenditures	-102,500
Other Financing Sources:
Transfers In:	143,500
Total Change In Fund Balance	41,000
Fund Balance - January 1, 2019	0
Fund Balance - December 31, 2019	41,000

Calculation

Excess (Deficiency) Of Revenues Over Expenditures = Total Revenues - Debt Service Expenditures = 0 - 102,500 = -102,500

Total Change In Fund Balance = Excess (Deficiency) Of Revenues Over Expenditures + Transfers In = -102,500 + 143,500 = 41,000

C.

Village Of Hawksbill
Statement Of Revenues, Expenditures, And Changes In Fund Balance Year Ended December 31, 2020
Revenues:
Total Revenues	0
Debt Service Expenditures:
Interest	199,875
Principal	205,000
Excess (Deficiency) Of Revenues Over Expenditures	-404,875
Other Financing Sources:
Transfers In:	$363,875
Total Change In Fund Balance	($41,000)
Fund Balance - January 1, 2020	41,000
Fund Balance - December 31, 2020	$0

Excess (Deficiency) Of Revenues Over Expenditures = Total Revenues - Debt Service Expenditures = 0 - (199,875+205,000) = -404,875

Total Change In Fund Balance = Excess (Deficiency) Of Revenues Over Expenditures + Transfers In = -404,875+ 363,875 = -41,000