Question

In: Accounting

As of December 31, 2016, Westport had $9,500,000 in 4.5 percent serial bonds outstanding. The serial...

As of December 31, 2016, Westport had $9,500,000 in 4.5 percent serial bonds outstanding. The serial bonds pay interest semiannually on July1 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 2017. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(1)

The operating budget for FY 2017 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 January 1 and July 1.

(2)

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

Journal entry 1: Record the appropriations for interest payments and bond redemption for the year.

Journal Entry 1b: Record the appropriations for interest payments and bond redemption for governmental fund.

Journal Entry 2: Record the transfer of resources for payment of principal and interest from the General Fund.

Journal Entry 2b: Record the payment of interest and principal on bonds in the Debt Service Fund

Journal Entry 2c: Record the payment of interest and principal on bonds at the government wide level

Solutions

Expert Solution

Answer 1:

Part a: Debt Service Fund:

Journal Entry 1

Other Financing Sources( Estrimated- Serial Bond) ................................................................. $ 1,416,250 Dr.

Interest and Principal Appropriations...................................................................................... $ 1,416,250 Cr.

Calculations:

Interest : January 1

$9,500,000 * 4.50% for half year is $ 213,750

Principal: January 1 :

$ 500,000

Interest : July 1: Remaining balance is $ 9,000,000 after payment of principal of $ 500,000 for Jan 1:

$9,000,000 * 4.50% for half year is $ 202,500

Principal: July 1 :

$ 500,000

Thus total of appropriations for Jan 1 and July 1 is $ 1,416,250

Part b: Goverment wide- activities:

Journal Entry 1b:

No entries are required to be made for activities undertaken by government.

Answer 2:

Journal Entry 2:

Cash A/c .................................................................................................................... $ 702.500 Dr

Other Financing Sources .............................................................................................. $ 702,500 Cr

Journal Entry 2b:

Interest Exp- Serial Bond A/c ....................................................................................... $ 202.500 Dr

Principal Exp- Serial Bond A/c ...................................................................................... $ 500,000 Dr

Cash A/c ......................................................................................................................$ 702,500 Cr

Journal Entry 2c:

Interest Exp- Serial Bond A/c ....................................................................................... $ 202.500 Dr

Serial Bonds Payable A/c ............................................................................................ $ 500,000 Dr

Cash A/c ......................................................................................................................$ 702,500 Cr


Related Solutions

On December 31, 2016, Gary Company had 50,000 shares of common stock outstanding for the entire...
On December 31, 2016, Gary Company had 50,000 shares of common stock outstanding for the entire year. On March 1, 2017, Gary purchased 2,400 shares of common stock on the open market as treasury stock paying $45 per share. Gary sold 600 of the treasury shares on June 1, 2017, for $47 per share. Gary issued a 10% common stock dividend on 7/2/2017. In addition, Gary had 3,000 shares of 9%, $50 par value, noncumulative convertible preferred stock outstanding at...
Stepfall Ltd had the following ratios at 31 December 2017 and 31 December 2016: 2017 2016...
Stepfall Ltd had the following ratios at 31 December 2017 and 31 December 2016: 2017 2016 Gross profit margin 27% 31% Return on capital employed 15% 22% Current ratio 1.1:1 0.7:1 Acid test ratio 0.8:1 0.6:1 Trade receivable days 33 days 48 days Inventory holding days 42 days 57 days Which ONE of the following statements is TRUE? a) The company’s profitability, working capital management and liquidity have improved. b) The company’s profitability and working capital management have deteriorated but...
At December 31, 2016, Novak Corporation had the following stock outstanding. 10% cumulative preferred stock, $100...
At December 31, 2016, Novak Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 108,060 shares $10,806,000 Common stock, $5 par, 4,031,000 shares 20,155,000 During 2017, Novak did not issue any additional common stock. The following also occurred during 2017. Income from continuing operations before taxes $22,200,000 Discontinued operations (loss before taxes) $3,335,000 Preferred dividends declared $1,080,600 Common dividends declared $2,480,000 Effective tax rate 35 % Compute earnings per share data as it should appear in the...
On December 31, 2016, Stiller Co., had 840 million common shares outstanding. During 2017, the following...
On December 31, 2016, Stiller Co., had 840 million common shares outstanding. During 2017, the following events occurred: January 21 24 million, $6, cumulative nonconvertible preferred shares were issued. February 28 48 million common shares were purchased and retired. April 30 A 25% common stock dividend was issued. August 31 96 million common shares were issued. No cash dividends were declared in 2017. For the year ended December 31, 2017, Stiller Co. reported a net loss of $50 million, including...
On December 31, 20X7, P purchased 50 percent of S's bonds outstanding which were originally issued...
On December 31, 20X7, P purchased 50 percent of S's bonds outstanding which were originally issued on January 1, 20X4, at 99. The total bond issue has a face value of $600,000, pays 10 percent interest annually, and has a 10-year maturity. Any premium or discount is amortized using the effective interest method. P paid $306,000 for its investment in S's bonds and intends to hold the bonds until maturity. How do I calculate the bond discount?
Exercise 4-13 At December 31, 2016, Culver Corporation had the following stock outstanding. 10% cumulative preferred...
Exercise 4-13 At December 31, 2016, Culver Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 108,612 shares $10,861,200 Common stock, $5 par, 4,060,980 shares 20,304,900 During 2017, Culver did not issue any additional common stock. The following also occurred during 2017. Income from continuing operations before taxes $24,647,300 Discontinued operations (loss before taxes) $3,285,900 Preferred dividends declared $1,086,120 Common dividends declared $2,248,400 Effective tax rate 35 % Compute earnings per share data as it should appear...
Exercise 4-13 At December 31, 2016, Grouper Corporation had the following stock outstanding. 10% cumulative preferred...
Exercise 4-13 At December 31, 2016, Grouper Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 107,710 shares $10,771,000 Common stock, $5 par, 4,024,000 shares 20,120,000 During 2017, Grouper did not issue any additional common stock. The following also occurred during 2017. Income from continuing operations before taxes $21,850,000 Discontinued operations (loss before taxes) $3,295,000 Preferred dividends declared $1,077,100 Common dividends declared $2,380,000 Effective tax rate 35 % Compute earnings per share data as it should appear...
on december 31 2016, p226 ltd purchased bonds of cz775 ltd. the bonds mature at a...
on december 31 2016, p226 ltd purchased bonds of cz775 ltd. the bonds mature at a value of 5,000,000. The stated interest is 3%. Interest paid each june 30 and December 31. The bonds were purchased to yield 3.4%. The bond will be accounted foras FVTPL and p226 follows IFRS 9. a) What is the price of the Bond b) Provide the 2017 Journal entries for June 30 and Dec 31 for P226. Use the net method and the standard...
36. Below is information for Dakota Corp. for 2016 and 2017: Bonds payable, December 31, 2016  ...
36. Below is information for Dakota Corp. for 2016 and 2017: Bonds payable, December 31, 2016   $500,000 Bonds payable, December 31, 2017   800,000 Loss on bond retirement—2017   15,000 Interest expense on bonds—2017   45,000 At the end of 2017, Dakota issued bonds at par value for $800,000 cash. The proceeds from these bonds were used to retire the $500,000 bond issue outstanding at the end of 2017 (before their maturity date). All interest expense was paid in cash during 2017. The...
Alakazam Corp. began business on January 1, 2016. At December 31, 2016, it had a $4,500...
Alakazam Corp. began business on January 1, 2016. At December 31, 2016, it had a $4,500 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired during 2016 at a cost of $900,000. The property, plant, and equipment is being depreciated on a straight-line basis over six years for financial reporting purposes, and is a Class 8—20% asset for tax purposes. Alakazam’s income before income tax for 2017 was $60,000. Alakazam Corp. follows IFRS and...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT