Debt Service Fund Entries and Statement The City of Waterman established a debt service fund to

Debt Service Fund Entries and Statement

The City of Waterman established a debt service fund to account for the financial resources used to

service the bonds issued to finance the ramp (see Exercise 18-6). The 10 percent, $150,000 bond

issue was sold at 104.0 on January 1, 20X2. It is a 10-year serial bond issue. The resources to pay the interest and annual principal will be from a property tax levy.

Additional Information

1. The operating budget for 20X2 included estimated revenue of $35,000. Budgeted appropria- tions included $15,000 for principal, $15,000 for interest, and $4,000 for other items. The bud- get also included an estimated transfer in of $5,000 from the capital projects fund.

2. The property tax levy was for $40,000 and an allowance for uncollectibles of $4,000 was established. Collections totaled $35,000. The remaining taxes were reclassified as delinquent and the allowance was reduced to $1,000. The bond premium was received from the capital projects fund.

3. The current portion of the serial bonds and the interest due this year were recorded and paid.

Other expenses charged to the debt service fund totaled $1,700, of which $1,200 was paid.

4. The nominal accounts were closed.

Required

a. Prepare entries for the debt service fund for 20X2.

b . Prepare a balance sheet for the debt service fund as of December 31, 20X2.

c. Prepare a statement of revenues, expenditures, and changes in fund balance for the debt service fund for 20X2.

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