fter discussions with property owners residing on Bruce and Garrison Streets, the city council of Hobson City,
Question:
fter discussions with property owners residing on Bruce and Garrison Streets, the city council of Hobson City, Alabama authorized installation of street lights to better protect area citizens. Suppose total cost of the project is $3,300,000. Hobson City’s general fund will contribute $300,000 and ten-year term bonds will be issued to fund construction of the project. Hobson City can issue bonds paying 3 percent annually at par. The principal and interest will be repaid in ten equal annual assessments paid by the affected property owners, calculated as a 10-year annuity whose present value is the bond principal. Because each annual assessment exceeds the interest due on the bonds, the excess is invested at 3 percent to retire the principal.
Required
Drop down options are as follows (Additions, Assessments receivable, Bond Proceeds, Cash, Deductions, Expenditures-interest, Investments, and Revenue from Assessments)
a. Calculate the amount of the total annual assessment needed to pay the annual interest for ten years and retire the bonds.
b. Assume the government is liable for the bonds. Prepare the fund journal entries and identify the funds affected when the bonds are issued, the assessments are levied, the first assessment is collected, and the first interest payment is made
Repeat b. assuming the government has no liability for the bonds, and assessments collected, invested, and disbursed for interest payments, are reported in a custodial fund. Repeat b. assuming the government has no liability for the bonds, and assessments collected, invested, and disbursed for interest payments, are reported in a custodial fund. Repeat b. assuming the government has no liability for the bonds, and assessments collected, invested, and disbursed for interest payments, are reported in a custodial fund. c. Repeat b. assuming the government has no liability for the bonds, and assessments collected, invested, and disbursed for interest payments, are reported in a custodial fund.
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III