Question

The Leslie Independent School District (LISD) services all of its long-term debt through a single Debt Service Fund. The LISD DSF balance sheet at December 31, 20X4, appeared as follows:


The district’s bond indenture required a fund balance reserve for term bond principal of $315,285 and a reserve for serial bond debt service assurance of $350,000 as of December 31, 20X4.
1. The LISD adopted the following DSF budget for its 20X5 calendar fiscal year:

Appropriations:    
(1) Serial bonds (8%, $2,500,000 unmatured at 1/1/X5):


The 1/5/X5 debt service payment was accrued at 12/31/X4 because dedicated resources were provided for that payment during 20X4.
(2) Term bonds (6%, $1,000,000 unmatured at 1/1/X5):
(a) 4/15/X5—Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30,000
(b) 10/15/X5—Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30,000
    60,000
The board also approved a $21,019 addition to the sinking fund Reserve for Term Bond Principal as required by the term bond indenture.
(3) Capital lease (7%, $400,000 book value at 1/1/X5):
Annual payment (including interest) due 3/25/X5 . . . . . . . . . .   38,986
Total Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $398,981
Required Financing:    
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $398,981
Addition to term bond sinking fund . . . . . . . . . . . . . . . . . . . . . 21,019
    $420,000
Authorized Financing Sources:    
Estimated property tax revenues . . . . . . . . . . . . . . . . . . . . . . .   $250,000
Estimated interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .  52,000
Authorized transfer from General Fund . . . . . . . . . . . . . . . . .   118,000
    $420,000
2. All debt service payment transactions occurred during 20X5 as they were budgeted and scheduled. Investments were liquidated—in $1,000 blocks—the day before cash was required; the cash balance was never permitted to be less than $5,000.
3. The General Fund transfer was made on 2/12/X5 and was invested (at par); the sinking fund Reserve for Term Bond Principal was also adjusted on that date. The School Board committed amounts equal to the transfer for debt service. Amounts equal to the balance in the reserves are considered externally restricted regardless of the source of the resources.
4. Investment earnings during 20X5 were $54,000, including $15,000 of accrued interest receivable at 12/31/X5. The ending cash balance at 12/31/X5 was $13,509. (Record all investment earnings transactions and events at 12/31/X5.)
5. Property taxes for the year, all received on 5/8/X5, totaled $256,000. The tax revenues are restricted for debt service.

Required
(a) Prepare the summary journal entries necessary to record these transactions and events in the detailed General Ledger accounts or in the General Ledger, Revenues Ledger, and Expenditures Ledger of the Leslie Independent School District during 20X5, including closing entries. Key the entries by date.
(b) Prepare a balance sheet at 12/31/20X5 and a Statement of Revenues, Expenditures, and Changes in Fund Balances for the year then ended for the LISD Debt ServiceFund.


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  • CreatedOctober 25, 2014
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