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Journal Entries for the Village of Harris: Capital Projects

Problem 5-7: The Village of Harris issued $5,000,000 in 6 percent general obligation, taxsupported bonds on July 1, 2011, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2012. Harris has a calendar fiscal year.

1. A capital projects fund transferred the premium ($50,000) to the debt service fund.

2. On December 31, 2011, funds in the amount of $150,000 were received from the General Fund and the first interest payment was made.

3. The books were closed for 2011.

4. On June 30, 2012, funds in the amount of $350,000 were received from the General Fund, and the second interest payment ($150,000) was made along with the first principal payment ($250,000).

5. On December 31, 2012, funds in the amount of $142,500 were received from the General Fund and the third interest payment was made ($142,500).

6. The books were closed for 2012.

a. Prepare journal entries to record the events above in the debt service fund.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2011.

c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2012.

Problem 6-3: Why might it be desirable to operate enterprise funds at a profit?

Solution Preview

a. Prepare journal entries to record the events above in the debt service fund.

Village of Harris - General Journal for the Debt Service Fund

Debit Account Name Credit Account Name Debit Credit
Cash 50,000
Other Financing Sources, Transfer In 50,000
Premium transferred to the Debt Service Fund
Cash 150,000
Other Financing Sources, Transfer In 150,000
Received from the General Fund
Expenditures-Interest 150,000
Cash 150,000
Record the First Interest Payment
Other Financing Sources-Transfers In 200,000
Expenditures-Interst 150,000
Fund Bal Reserved for Debt Service 50,000

Cash 350,000
Other Financing Sources, Transfer In 350,000
Received from the General Fund
Expenditures-Interest 150,000
Expenditures-Principal 250,000
Cash 400,000
...

Solution Summary

The journal entries for the village of Harris and capital projects are examined.

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