On July 1, 20X7, the first day of its fiscal year, the City of Taupe issued serial bonds with a face amount of $5,000,000 and having maturities ranging from one to twenty years to make certain street and park improvements. The bonds were issued at 102 and bear interest of 5 percent per year, payable semiannually on January 1 and July 1, with the first payment due on January 1, 20X8. The first installment of principal in the amount of $250,000 is due on July 1, 20X8. Premiums on bonds issued must be deposited directly in the debt service fund and be used for payment of bond interest. Debt service for the serial bonds will be provided by a 0.25% sales tax imposed on every dollar of sales in the city. Transaction data related to the city’s debt service fund for these bonds is attached.

REQUIRED: 

(1) Prepare general journal entries, in proper form, to record the transactions related to the debt service fund for fiscal years 20X8 and 20X9. Show appropriate supporting calculations where necessary. Use the appropriate date for the entry. Omit explanations.

(2) Prepare a statement of revenues, expenditures, and changes in fund balance, in the proper format, for the debt service fund for fiscal year 20X9.

	CITY OF TAUPE TRANSACTIONS FOR DEBT SERVICE FUND FOR FISCAL YEARS 20X8 AND 20X9
(a)	Record the fiscal year 20X7-20X8 budget for the Serial Bond Debt Service Fund. The city estimates that the sales tax will generate $440,000 in fiscal year 20X8. Appropriations need to be set up for those items the city will need to pay on the bond issue for fiscal year 20X8.
(b)	Record the issuance of the bonds that affects the debt service fund.
(c)	Street and park improvement sales taxes for debt service of $248,000 were collected in the six months ending December 31, 20X7. These should be recorded directly in the debt service fund.
(d)	On January 1, 20X8, the city mailed checks to bondholders for semiannual interest on the bonds.
(e)	During the six months ended June 30, 20X8, sales tax collections for debt service amounted to $194,600.
(f)	Made all appropriate adjusting and closing entries at June 30, 20X8, the end of the fiscal year.
(g)	Record the fiscal year 20X9 budget for the debt service fund, assuming the sales tax will generate $492,000 in fiscal year 20X9.
(h)	On July 1, 20X8, the city mailed checks to bondholders for the appropriate amounts due on this date.
(i)	Street and park improvement sales taxes for debt service of $260,000 were collected in the six months ending December 31, 20X8.
(j)	On January 1, 20X9, the city mailed checks to bondholders for the appropriate amounts due on this date.
(k)	During the six months ended June 30, 20X9, sales tax collections for debt service amounted to $242,500.
(l)	Made all appropriate adjusting and closing entries at June 30, 20X8, the end of the fiscal year.

Answer rating: 100% (QA)

Answer 1 a Budget for Serial Bond Debt Service Fund Estimated sales tax revenue 440000 Expenditures ... View the full answer