Governmental Accounting Chapter 6: Accounting for General Long-Term Liabilities and Debt Service

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1 Governmental Accounting Chapter 6: Accounting for General Long-Term Liabilities and Debt Service E 6-3: p. 249: Governmental Activities 1. --/-- Dr.\ Cash Cr.\ Taxes Receivables - Current --/-- Dr.\ Bond Payable Dr.\ Expenses Interest on Long-term Debt 2. --/-- Dr.\ Cash Cr.\ Bond Payable Cr.\ Premium on Bond Payable Cr.\ Interest Expense 3. --/-- Dr.\ Capital Lease Obligation Payable Dr.\ Expenses Interest on Capital Leases 4. --/-- Dr.\ Cash Cr.\ Bond Payable-Serial Bond --/-- Dr.\ Bond Payable Term Bond Governmental fund Dr. Cr. Dr. Cr. --/-- General Fund: Dr.\ Cash Cr.\ Taxes Receivables - Current 600, ,000 5,150,000 94,191 15, ,000 50, ,000 Dr.\ Expenditures Bond Principal --/-- Capital Project Fund: Dr.\ Cash Cr.\Other financing sources Proceeds of Bonds Cr.\ Due to Other Funds Dr.\ Expenditures Principal of Capital Lease Obligation Dr.\ Expenditures Interest on Capital Lease Obligation Dr.\ Cash Cr.\ Other financing sources Proceeds of Serial Bonds Dr.\ Other Financing Uses Refunded Bonds 600, ,000 5,150,000 94,191 15, , ,

2 E 6-4: p. 249: Bonds issued at premium = 5, x 101% = $5,555,000 Premium = 5,555,000 5, = $55,000 Accrued interest collected at the date of issuing bonds for the period 1/1 1/6 (5 months) = 5, x 3% x 5/12 = $68,750 Premium & accrued interest collected by GF will be transferred to DSF = 55, ,750 = $123,750 First payment of Interest expense by DSF will be in 1/7 = 5, x 3% x 6/12 = $82,500 Budgetary Entry in DSF (First Year): 1/1/20xx Dr.\Estimated other financing sources Cr.\Appropriations Cr.\ Budgetary fund balance Dr. Cr. 123,750 82,500 41,250 E 6-6: p. 250: a. Budgetary journal entry at the beginning of the fiscal year: 1/7/2010 Dr.\Estimated other financing sources Dr.\ Estimated revenue Cr.\ Estimated other financing uses Cr.\Appropriations Cr.\ Budgetary fund balance Dr. Cr. 5, 1,006,500 1, 6,500 b. Budgetary fund balance = $6,500 c. No, This DSF is dictated for a bond issue. d. Yes, there is a Proceeds of refunding bonds & Payment to to old bond holders (OFU)

3 e. Franklin County Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended June 30, 2011 Revenues: Sales Taxes $1,001,400 Investment Earnings 5,400 Total Revenues $ 1,006,800 Expenditures: Bond Interest $ Bond Principal,000 Total Expenditures 1, Excess of Expenditures over Revenues (818,200) Other Financing Sources (Uses): Interfund transfers In Proceeds of Refunding Bonds Payment to Escrow Agent () Total Other Financing Sources (Uses) Change (Increase) in Fund Balances 6,800 Fund Balances, 1/7/ ,200 Fund Balances, 30/6/ ,000 E 6-8: p. 251: Calculation of Interest and principal payment in 2011: Interest Principal Total 1/1/2011 9, x 4.5% x ½ = $ $ $ 713,750 1/7/2011 9,000,000 x 4.5% x ½ = 702,500 Total $ $,000 1, - 3 -

4 a. Journal entries: 1. 1/1/2011 Dr.\ Estimated Revenues Dr.\ Estimated Other Financing Sources Cr.\ Appropriations Cr.\ Budgetary Fund Balance 2. 1/1/2011 Dr.\ Cash Cr.\Other financing sources Interfund transfers In 1/1/2011 Dr.\ Expenditures Bond Principal 3. 1/1/2011 Dr.\Taxes Receivables - Current Cr.\ Revenues Property Taxes Governmental Activities Dr. Cr. Dr. Cr. 1/1/2011 No Entry 1, 1/1/2011 No Entry 713, /1/2011 Dr.\ Bonds Payable Dr.\ Accrued Interest Payable 1/1/2011 Dr.\Taxes Receivables - Current Cr.\ General Revenues Property Taxes Restricted for Debt Service --/--/2011 Dr.\ Cash 1/7/2011 No Entry 4. --/--/2011 Dr.\ Cash 5. 1/7/2011 Dr.\ Cash Cr.\Other financing sources Interfund transfers In 1/7/2011 Dr.\ Expenditures Bond Principal 1/7/2011 Dr.\ Bonds Payable Dr.\Expenses Interest on Long-Term Debt 702, /12/2011 Dr.\Taxes Receivables Delinquent 31/12/2011 Dr.\Taxes Receivables Delinquent 31/12/2011 No Entry 31/12/2011 Dr.\Expenses Interest on Long-Term Debt Cr.\ Accrued Interest Payable 31/12/2011 Dr.\ Appropriations 1, Dr.\ Budgetary Fund Balance No Entry Cr.\ Estimated Revenues Cr.\Estimated Other Financing Sources 31/12/2011 Dr.\Other Financing Sources Interfund Transfers In Dr.\ Revenues Property Taxes Cr.\ Expenditures Bond Principal Cr.\ Expenditures Bond Interest Cr.\ Fund Balance Note:,000 Accrued interest (Governmental Activities) in 31/12/2011 = $8, x 4.5% x ½ = $191, , , , ,250

5 Cash (Fund Balance) Balance 1/1/ ,000 Bond Principal (1/1/2011) Other Financing Sources (1/1/2011) Bond Interest (1/1/2011) Taxes Receivables Bond Principal (1/7/2011) Other Financing Sources (1/7/2011) Bond Interest (1/7/2011) Balance 31/12/ ,000 b. New Town Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended December 31, 2011 Revenues: Property Taxes $ Expenditures: Bond Interest $ Bond Principal,000 Total Expenditures 1, Excess of Expenditures over Revenues (396,250) Other Financing Sources (Uses): Interfund transfers In Change (Increase) in Fund Balances Fund Balances, 1/1/ ,000 Fund Balances, 31/12/ ,000 c. New Town Balance Sheet As of December 31, 2011 Assets Cash $ 528,000 Taxes Receivables Delinquent Total Assets $ 529,000 Liabilities & Fund Balances Liabilities 0 Fund Balance 529,000 Total Liabilities & Fund Balances $ 529,

Accounting for Governmental Operating Activities Illustrative Transactions and Financial Statements

Chapter 4 Accounting for Governmental Operating Activities Illustrative Transactions and Financial Statements McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Governmental