Question

Record the following transactions in the journal of Debt Service Fund and Governmental
Activities. (You must prepare the journal form using Excel)

As of December 31, 2019, Pepa City had $9,500,000 in 4.5 percent serial bonds outstanding. The
serial bonds pay interest semiannually on July 1 and December 31, with $500,000 in bonds being
retired on each interest payment date. Resources for payment of principal and interest are
transferred from the General Fund. Prepare debt service fund and government-wide entries in
general journal form to reflect, as necessary, the following information and transactions for FY
2020.

1. The operating budget for Year 2020 consists of other financing sources (transfers from
the General Fund) equal to estimated principal and interest payments. Appropriations also
must be provided for interest payments and bond redemptions on July 1 and December
31. (If no entry is required for a transaction/event, select "No Journal Entry
Required" in the first account field.)

2. Cash was received from the General Fund and checks were written and mailed for the
July 1 and December 31 principal and interest payments.

3. Closing budgetary accounts and operating accounts at December 31.

Answer 1

Particular	DR amt	CR amt
1. The operating budget for Year 2020 consists of other financing sources (transfers from the General Fund) equal to estimated principal and interest payments. Appropriations also must be provided for interest payments and bond redemptions on July 1 and December 31
Debt Service Fund
ESTIMATED OTHER FINANCING SOURCES	416250
Appropriations		416250
(interfund transfer for interest payment on july and december
Governmental Activities:
No entries required
2. Cash was received from the General Fund and checks were written and mailed for the July 1 and December 31 principal and interest payments.
Debt Service Fund
For July payment
cash	213750
OTHER FINANCING SOURCES-inter fund transfer		213750
( Cash was received from the General Fund)
interest on bond	213750
Bond principal	5,00,000
To cash		713750
(interest and principal repaied)
Governmental Activities:
Interest on bond payable	213750
Bond payable	500000
To cash		713750
(interest and principal repaied)
FOR December payment
Debt Service Fund
cash	202500
OTHER FINANCING SOURCES-inter fund transfer		202500
( Cash was received from the General Fund)
interest on bond	202500
Bond principal	5,00,000
To cash		702500
(interest and principal repaied)
Governmental Activities:
Interest on bond payable	202500
Bond payable	500000
To cash		702500
(interest and principal repaied)
3. Closing budgetary accounts and operating accounts at December 31.
Debt Service Fund
Appropriations	416250
ESTIMATED OTHER FINANCING SOURCES		416250
(closing entry made)
OTHER FINANCING SOURCES-inter fund transfer	416250
Revenue	10,00,000
Interest on bond payable		416250
Bond payable		10,00,000
(closing entry made)
Governmental Activities:
Expense - ineterst on long term debt	191250
Interest on bond payable		191250
(closing entry made)

	Opening Balance	interest @ 2.25% (4.5*1/2)	interest payment	Principal payment	Closing bal (op.-prin. Payment)
31-12-2019					95,00,000
01-07-2020	95,00,000	2,13,750	2,13,750	5,00,000	90,00,000
31-12-2020	90,00,000	2,02,500	2,02,500	5,00,000	85,00,000
			4,16,250
31-12-2020	85,00,000	1,91,250	1,91,250	5,00,000	80,00,000