ACCOUNTING FOR GENERAL LONG-TERM LIABILITIES AND DEBT SERVICE

Transcription

1 CHAPTER 6: ACCOUNTING FOR GENERAL LONG-TERM LIABILITIES AND DEBT SERVICE c. 6. c. 2. a. 7. b. 3. a. 8. b. 4. b. 9. a. 5. c. 10. d General Fund: ESTIMATED REVENUES 650,000 ESTIMATED OTHER FINANCING USES 650,000 TAXES RECEIVABLE-CURRENT 650,000 REVENUES 650,000 CASH 650,000 TAXES RECEIVABLE-CURRENT 650,000 OFU - INTERFUND TRANSFER OUT 650,000 CASH 650,000 Debt Service Fund: ESTIMATED OTHER FINANCING SOURCES 650,000 APPROPRIATIONS 250,000 FUND BALANCE 400,000 CASH 650,000 OFS - INTERFUND TRANSFER IN 650,000 EXPENDITURES - INTEREST 250,000 CASH 250,000 TAXES RECEIVABLE-CURRENT 650,000 GENERAL REVENUES-TAXES 650,000 EXPENSES INTEREST ON LONG-TERM DEBT 250,000 CASH 250,000 Debits Credits 2. Capital Projects Fund: CASH 5,000,000 PROCEEDS OF BONDS 5,000,000 1

2 Debt Service Fund: CASH 150,000 OTHER FINANCING SOURCE- PREMIUM ON BONDS PAYABLE 100,000 REVENUES 50,000 CASH 5,150,000 SERIAL BONDS PAYBLE 5,000,000 ACCRUED INTEREST PAYABLE 50,000 PREMIUM ON BONDS PAYBLE 100, Debt Service Fund: CASH 180,000 REVENUES 180,000 CASH 180,000 GENERAL REVENUES-INVESTMENT EARNINGS 180, Debt Service Fund: CASH 2,800,000 OFS PROCEEDS OF REFUNDING BONDS 2,800,000 OTHER FINANCING USES REFUNDED BONDS 2,800,000 EXPENDITURES 700,000 CASH 3,500,000 CASH 2,800,000 SERIAL BONDS PAYABLE 2,800,000 TERM BONDS PAYABLE 3,500,000 CASH 3,500, a. Capital Projects Fund: EXPENDITURES 362,345 OTHER FINANCING SOURCES CAPITAL LEASE AGREEMENTS 362,345 Computations: The present value of an ordinary annuity of $1 for 9 years at 8 percent per year is Therefore, the present value of the 9 annual payments of $50,000 each is $312, The present value of the capital lease obligation is $362,345 to the nearest dollar ($312, $50,000 paid at the inception of the lease). 2

3 b. EQUIPMENT 362,345 CAPITAL LEASE OBLIGATIONS PAYABLE 312,345 CASH 50,000 NOTE: The asset is recorded at the lesser of the present value of the capital lease obligation or the fair value of the fire truck, $370,000. c. Debt Service Fund: EXPENDITURES INTEREST 24,988 EXPENDITURES PRINCIPAL 25,012 CASH 50,000 EXPENSES INTEREST ON CAPITAL LEASES 24,988 CAPITAL LEASE OBLIGATIONS PAYABLE 25,012 CASH 50,000 Computation: Interest Payment Unpaid Payment Amount of on Unpaid on Lease Date Payment Balance at 8% Principal Obligation $362,345 0 $50,000 $ -0- $50, , ,000 24,988 25, , a. VILLAGE OF VINCENT SERIAL BOND DEBT SERVICE FUND GENERAL JOURNAL 1. ESTIMATED REVENUES 360,000 APPROPRIATIONS 200,000 FUND BALANCE 160, TAXES RECEIVABLE CURRENT 350,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 20,000 REVENUES TAXES 330, CASH 175,000 TAXES RECEIVABLE CURRENT 175, EXPENDITURES BOND INTEREST 100,000 CASH 100,000 3

4 5. CASH 155,000 TAXES RECEIVABLE CURRENT 155, CASH 12,500 INTEREST RECEIVABLE ON INVESTMENTS 12,500 INVESTMENTS 12,500 CASH 12, INVESTMENTS 70,000 CASH 70, EXPENDITURES BOND INTEREST 100,000 CASH 100, CASH 15,000 REVENUES INTEREST ON INVESTMENTS 15,000 INVESTMENTS 75,000 CASH 75, INTEREST RECEIVABLE ON INVESTMENTS 13,000 REVENUES INTEREST ON INVESTMENTS 13, To reclass: TAXES RECEIVABLE DELINQUENT 20,000 TAXES RECEIVABLE CURRENT 20,000 ESTIMATED UNCOLLECTIBLE CURRENT TAXES 20,000 ESTIMATED UNCOLLECTIBLE DELINQUENT TAXES 20,000 To close: APPROPRIATIONS 200,000 REVENUES TAXES 330,000 REVENUES INTEREST ON INVESTMENTS 28,000 FUND BALANCE 2,000 ESTIMATED REVENUES 360,000 EXPENDITURES BOND INTEREST 200,000 4

5 b. VILLAGE OF VINCENT SERIAL BOND DEBT SERVICE FUND BALANCE SHEET AS OF DECEMBER 31, 2005 ASSETS CASH $ 2,000 INVESTMENTS 657,500 TAXES RECEIVABLE DELINQUENT $20,000 LESS ESTIMATED UNCOLLECTIBLES 20, INTEREST RECEIVABLE ON INVESTMENTS 13,000 TOTAL ASSETS $672,500 FUND EQUITY FUND BALANCE $672,500 TOTAL FUND EQUITY $672,500 c. VILLAGE OF VINCENT SERIAL BOND DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 2005 REVENUES: TAXES $330,000 INTEREST ON INVESTMENTS 28,000 TOTAL REVENUES 358,000 EXPENDITURES: INTEREST ON BONDS 200,000 EXCESS OF REVENUES OVER EXPENDITURES 158,000 FUND BALANCE, JANUARY 1, ,500 FUND BALANCE, DECEMBER 31, 2005 $672,500 d. VILLAGE OF VINCENT SERIAL BOND DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2005 ACTUAL OVER BUDGET ACTUAL (UNDER) BUDGET REVENUES: TAXES $330,000 $330,000 $ -0- INTEREST ON INVESTMENTS 30,000 28,000 (2,000) TOTAL REVENUES 360, ,000 (2,000) EXPENDITURES: 5

6 INTEREST ON BONDS 200, , EXCESS OF REVENUES OVER EXPENDITURES 160, ,000 (2,000) FUND BALANCE, JANUARY 1, , , FUND BALANCE, DECEMBER 31, 2005 $674,500 $672,500 $ (2,000) 6-9. a. (1) SINKING FUND SCHEDULE FISCAL REQUIRED * EXPECTED ENDING YEAR PERIOD ADDITION EARNINGS BALANCE $174, $ 0.00 $174, , , , , , , , , , , , , , , ,128, , , ,336, , , ,551, , , ,772, , , ,999, ** * Required addition = 2,000,000/ where is the future amount of an annuity of $1 for 10 periods at 3 percent per period. ** Rounding error accounts for the $0.02 deficit balance. 6

7 Ch. 6, Solutions, 6-9 (Cont d) WORKSHEET SOLUTIONS CAPITAL PROJECTS FUND CAPITAL PROJECTS FUND GOVERNMENTAL ACTIVITIES (a2) Cash 2,000,000 (n) Contracts Payable 950,000 (a2) Cash 2,000,000 Proceeds of Bonds 2,000,000 C/P - Ret. % 47,500 Bonds Payable 2,000,000 Cash 902,500 (b) Enc. 1,950,000 (c) Investments 174,461 Res. for Enc. 1,950,000 (o) C/P - Ret. % 97,500 Cash 174,461 Const. Expend. 27,500 (e) Res. for Enc. 1,000,000 Cash 125,000 (d) Interest Expense 60,000 Constr. Expend. 1,000,000 Cash 60,000 Enc. 1,000,000 (p) Fund Balance 977,500 Contracts Payable 1,000,000 Const. Expend. 977,500 (e) CWIP 1,000,000 Contracts Payable 1,000,000 (f) Contracts Payable 1,000,000 Interfund Transfer- 22,500 out C/P- Retained %* 50,000 Cash 22,500 (f) Contracts Payable 1,000,000 Cash 950,000 C/P Retained % 50,000 Fund Balance 22,500 Cash 950,000 (i) OFS-Proceeds 2,000,000 Interfund Transfer- 22,500 of Bonds out Enc. 950,000 (g) Investments 174,761 Constr. Expend. 1,000,000 Cash 174,761 Fund Balance 50,000 (h) Investments 5,234 (k) Enc. 950,000 General Revenues- Interest Fund Balance 950,000 (i) Interest Expense 60,000 Acc. Int. Payable 60,000 (m) Res. for Enc. 950,000 Constr. Expend. 950,000 (i) General Revenues- Interest Encumbrances 950,000 Net Assets Unres. 54,766 Contracts Payable 950,000 Interest Expense 60,000 5,234 5,234 C/P - Ret. % means Contracts Payable - Retained Percentage and ** CWIP means Construction Work in Progress 7

8 Ch. 6, Solutions, 6-9 (Cont d) WORKSHEET SOLUTIONS DEBT SERVICE FUND DEBT SERVICE FUND DEBT SERVICE FUND (a3) Est. OFS - Tr. In 468,922 (j) Expenditures BI 60,000 (u) Expend. - BP 2,000,000 Est. Rev (1/2 yr) 5,234 Cash 60,000 Expend. - BI 60,000 Appropriation 60,000 Cash 2,060,000 Fund Balance 414,156 (Est. OFS consists of 2 times sinking fund additions (174,461) and 2 interest payments (120,000), although only one interest payment is authorized in FY2000) Due from GF 468,922 (l) Est. OFS - Tr. In 468,922 Appropriations 2,060,000 OFS- Inter. Tr. In 468,922 Est. Revenues 26,802 Expenditures - BP 2,000,000 Appropriations 120,000 Expenditures -BI 60,000 (c) Cash 234,461 Fund Balance 375,724 Due from GF 234,461 Due from GF 468,922 Investments 174,461 OFS - Op. Tr. In 468,922 Cash 174,461 (p) Cash 22,500 (d) Expend BI* 60,000 Interfund Tr. In. 22,500 Cash 60,000 Investments 22,500 (g) Cash 234,461 Cash 22,500 Due from GF 234,461 (q) Due from GF 234,461 Investments 174,761 Cash 234,461 Cash 174,461 (r) Investments 53,171 (h) Investments 5,234 Interest Revenue 53,171 Interest Revenue 5,234 Cash 1,825,539 (i) Appropriations 60,000 Investments 1,825,539 OFS Inter Tr. In 468,922 (s) Appropriations 120,000 Interest Revenue 5,234 OFS- InterfundTr. In 468,922 Expend - BI 60,000 Interest Revenue 99,712 Est. OFS - Tr. In 468,922 Expend. BI 120,000 Est. Revenues 5,234 Est. Revenues 99,712 Est. OFS - Tr. In 468,922 * BI means Bond Interest ** BP means Bond Principal (t) Fund Balance 2,060,000 Appropriations 2,060,000 8

9 Ch. 6, Solutions, 6-9 (Cont d) GOVERNMENTAL ACTIVITIES (j) Interest Payable 60,000 Cash 60,000 WORKSHEET SOLUTIONS (m) Building 1,950,000 CWIP 1,000,000 Contracts Payable 950,000 (n) Contracts Payable 950,000 Cash 902,500 C/P Retained % 47,500 (o) C/P Retained % 97,500 Building 27,500 Cash 125,000 (p) Investments 22,500 Cash 22,500 (r) Investments 53,171 General Revenues- Interest 53,171 Cash 1,825,539 Investments 1,825, Adj. Entry (u) Interest Expense 60,000 Interest Payable 60,000 Cl. Entry Omitted (u) Bonds Payable 2,000,000 Interest Payable 60,000 Cash 2,060,000 9