1 [6-d-1] On January 2, 2019, the Street Improvement Bond Debt Service Fund (DS)
budget for 2019 was legally adopted. The budget provides for estimated property tax
revenue of $900,000, of which $250,000 will be invested to accumulate resources over
the next four years for the $1,000,000 principal that will be due for payment in 2019 for the
4% bonds. The remaining revenues are intended to pay $80,000 interest due during 2019 on
the 4% deferred serial bonds, as well as the $50,000 interest payment that will be due on
the 5% serial bonds on July 1, 2019. The 2019 property tax levy also provides resources
to retire the $200,000 of 5% serial bonds that mature on January 1, 2020, and interest of
$90,000 due on that date ($40,000 interest on the 4% deferred serial bonds and $50,000
on the 5% serial bonds). The budget also provides for estimated investment earnings of
$3,000 during 2019. No premium or accrued interest on bonds sold is included in the
2019 estimated other financing sources or estimated revenues. If the Street Improvement
Debt Service Fund (DS) does receive such items, they will be invested and used for eventual
bond redemption or interest payments, and the budget will be amended accordingly to
reflect such items.
Also, again, there are no principal payments due during 2019 and therefore should not be
budgeted for.
Required: Record the budget for FY 2019 in the general journals for the Street
Improvement Bond Debt Service Fund (DS). [As a reminder, you should make journal
entries for FY 2019 only in the Debt Service Fund (DS), ignoring any entries for
governmental activities at the government-wide (GW) level or any other funds.]
2 [6-d-2] Property taxes were levied in the amount of $910,000, of which $20,000
was estimated to be uncollectible.
3 [6-d-3] Bond interest due on January 1, 2019 was paid for the 4% deferred serial
bonds in the amount of $40,000.
4 [6-d-4] On March 1, 2019, the Street Improvement Debt Service Fund (DS) received
$30,000 of premium from the sale of the additional $2,000,000 street improvement bonds
(see first paragraph of section d.), plus $17,000 for two months of accrued interest
($47,000 in total). The $47,000 of premium and accrued interest was invested in
temporary investments earning 3 percent per annum.
Required: Prepare the journal entry to record the receipt of $47,000 in cash [Note: the entry should
look similar to problem 6-b-2]. Also, prepare a journal entry to amend the FY 2019 budget
to reflect the amounts of the premium and accrued interest on bonds sold, including an additional
amount for estimated revenues for investment earnings in the amount of $1,175. (Note: You should
credit Budgetary Fund Balance for the full $48,175, since the appropriation for the
interest payment due on July 1, 2019, was recorded in Paragraph 6-d-1).
5 [6-d-5] By June 30, 2019, property taxes had been collected in the amount of
$460,000; $200,000 was invested in temporary investments that earn 3 percent per
annum.
6 [6-d-6] The Debt Service Fund (DS) repaid the short-term loan it received from the General
Fund in December 2018 in the amount of $42,000.
7 [6-d-7] The following bond interest amounts due on July 1, 2019 were paid on that date:
4% deferred serial bonds: $ 40,000
5% serial bonds: $ 50,000
8 [6-d-8] During the second half of 2018, property taxes were collected in the
amount of $430,000. At year-end, the uncollected amount of current property taxes
receivable and related estimated uncollectible amount were reclassified as delinquent.
Interest and penalties of $3,600 were also levied, of which ($180) was estimated as
uncollectible.
Required: Prepare the journal entries to record the receipt of current property taxes, to
reclassify the uncollected amount as delinquent, and to accrue the related interest and
penalties.
9 [6-d-9] Investment earnings received in cash during the year amounted to
$4,175.

Chart of Accounts:

Cash

Taxes Receivable-Current

Estimated Uncollectible Current Taxes

Taxes Receivable-Delinquent

Estimated Uncollectible Delinquent Taxes

Interest and Penalties Receivable on Taxes

Estimated Uncollectible Interest and Penalties

Investments

Interfund Loans Payable-Current

Fund Balance-Restricted

Budgetary Fund Balance

Estimated Revenue-Taxes

Estimated Revenue-Interest and Penalties on Taxes

Estimated Revenue-Investment Income

Estimated Revenue-Accrued Interest on Bonds Sold

Estimated Revenue-Change in Fair Value of Investments

Estimated Other Financing Sources-Premium on Bonds

Estimated Other Financing Sources-lnterfund Transfers In

Revenue-Taxes

Revenue-Interest and Penalties on Taxes

Revenue-Investment Income

Revenue-Accrued Interest on Bonds Sold

Revenue-Change in Fair Value of Investments

Other Financing Sources-Premium on Bonds

Other Financing Sources-Interfund Transfers In

Appropriations

Expenditures-Bond Interest