Reference no: EM132467272

Existing Debt Service Fund Transactions

The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service an $16,000,000, 3 percent tax-supported bond issue. As of December 31,2016, this serial bond issue had a balance of $12,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 and July 1 of each year.

As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2017, were Cash with Fiscal Agent and Fund Balance-Assigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2016 in order to be able to pay bond principal and interest due on January 1, 2017.) The government chose not to accrue interest payable.

Required:

Question a. Open a general journal for the City Hall Debt Service Fund and prepare journal entries for the following transactions. Control accounts are not necessary

Problem (1) The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day.

Problem (2) Cash in the amount of $574,000 was received from the General Fund on June 30