Reference no: EM133052619

Question - X City, which operates on the calendar year, issued a 5-year, 8%, $100,000 note to the Bank of the West on January 5, 2017. The proceeds of the note were recorded in a Capital Projects Fund. Interest and one-tenth (1/10) of the principal are due semiannually, on January 5 and July 5, beginning July 5, 2017. A DSF has been established to service this debt; financing will come from General Fund transfers and a small debt service tax approved several years ago. The net assets of the fund at year end are not restricted or committed.

Transactions and Events

1. January 6: The DSF budget for 2017 was adopted. The General Fund contribution was estimated at $12,000; the tax levy was expected to yield $16,000. The appropriations included the January 5, 2018, debt service payment.

2. The taxes were levied and received, $25,000.

3. The July 5, 2017, payment of principal and interest was made.

4. The General Fund contribution of $12,000 was received.

5. The residual balance of a discontinued Capital Projects Fund, $7,000, was transferred to the DSF.

6. The January 5, 2018, payment was accrued.

7. Closing entries were prepared at December 31, 2017.

Required -

1. Prepare the general journal entries (budgetary and actual) needed to record the transactions and events above.

2. Prepare a balance sheet at December 31, 2017, and a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year then ended for the DSF.