The following activities and transactions are typical of those that may affect the various funds used by a typical municipal government.
Prepare journal entries to record each transaction and identify the fund in which each entry is recorded.
A. The Greenville City Council passed a resolution approving a general operating budget of $5,000,000 for the fiscal year 2020. Total revenues are estimated at $4,900,000.
B. The Greenville City Council Passed an ordinance providing a property tax levy of $6.25 per $100 of assessed valuation for the fiscal year 2020. Total property valuation in Greenville City is $204,800,000. Property is assessed at 25% of current property valuation. Property tax bills are mailed to property owners. An estimated 3% will be uncollectible.
C. Reed City sold a general obligation term bond issue for $1,000,000 at 105 to a major brokerage firm. The stated interest rate is 5%. Proceeds are to be used for construction of a new Central Law Enforcement Building. (Note: Entries are required in the Capital Project Fund).
D. The premium on bond sale in (C) above is transferred to the Debt Service Fund.
E. At the end of fiscal year 2020, the Greenville City Council approves the write-off of $52,550 of uncollected 2019 taxes because of inability to locate the property owners. The tax bills have been referred to the legal department for further action.
F. The Reed City Central Law Enforcement Building [(C) above] is completed. Contracts and expenses total $989,000, and all have been paid and recorded in the Capital Project Fund. Prepare entries to close this project and record the completion of the project in all other funds or account groups affected. Any balance in the Capital Project Fund is to be applied to payment of interest and principal of the bond issue.
G. On May 1, 2020, Hopi City supervised the issue of 6% serial bonds at par to finance street curbing in an area recently incorporated in the city limits. The face amount of the bonds is $600,000; interest is payable annually, and bonds are to be retired in equal amounts over five years from collections from assessments against property owners. The City acts as a collection agent and has given assurances to the debt holders that it will guarantee payment of principal and interest even though it is not obligated to do so.
(1) Record the issuance of the bonds on May 1, 2020.
(2) Record the payment to bondholders on May 1, 2021.
H. The curbing project in (G) above was completed on November 30 at a total of $590,000.
Record summary entries for expenditure transactions May 1–November 30, 2020, and on completion of the project.