The Town of Canterbury accounts for debt service related to its $25,000,000 face value, 5% general obligation

Question:

The Town of Canterbury accounts for debt service related to its $25,000,000 face value, 5% general obligation term bonds, issued October l, 2013, in a debt service fund. The Town's accounting year ends on September 30. Interest on the bonds is due each March 31 and September 30. The following events occur in fiscal 2014:
1. The debt service fund budget called for $3,250,000 in transfers from the general fund, $65,000 in income on investments, and appropriations for the two semiannual interest payments.
2. The general fund transferred $3,250,000 to the debt service fund on November 15. The debt service fund invested the cash.
3. The debt service fund liquidated investments costing $580,000 and made the March 31 interest payment.
4. The debt service fund liquidated investments costing $600,000 and made the September 30 interest payment.
5. Investment income for the year, received in cash, was $68,000.
6. At September 30, 2014, the debt service fund's investments had a fair value of $2,060,000.
Assume that all debt service fund resources are committed.
Required
a. Prepare the journal entries to record the above events in the debt service fund. Include necessary closing entries.
b. Prepare the debt service fund's statement of revenues, expenditures, and changes in fund balances and the year-end for fiscal 2014. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...