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I am working on the City of Smithville project. It gives the following intro information:
I am working on the City of Smithville project. It gives the following intro information:e. On January 2, 2012, the City of Smithville approved the issuance of additional street improvement bonds in the total amount of $2,500,000. The new bonds will be deferred serial bonds and will bear interest at the nominal annual rate of 6 percent. These bonds are dated January 1, 2012, and will be issued during the year when the city’s bond underwriters believe market conditions are most favorable.The first interest payment on the new bonds will be due on July 1, 2012; interest will be payable January 1 and July 1 of each following year until maturity. $250,000 of bonds will mature on January 1, 2022, and in the same amount each year thereafter until all bonds of the 2012 issue have been retired. To give you some additional practice on accounting for a debt service fund, record the following events and transactions that are presumed to occur in fiscal year 2012 in the Street Improvement Debt Service Fund only. You should ignore entries that would be required in the General Fund and in the governmental activities general journal related to these transactions for fiscal year 2012. However, a new fund, the Investment Pool Fund, has recently been created (see Chapter 8). The Investment Pool Fund will be used to account for the investments of the Street Improvement Debt Service Fund, effective FY 2012. You will be prompted in Chapter 8 to make any entries related to these investments. The Street Improvement Debt Service Fund reports all such investments as Equity in Pooled Investments.What would be the journal entry for the Street Improvement Debt Service Fund for Para 6-e-1 ?1.[Para. 6-e-1] On January 1, 2012, the Street Improvement Debt Service Fund budget for 2012 was legally adopted. The budget provided for estimated other financing sources to be transferred from the General Fund in an amount equal to the $150,000 appropriations for interest for the year on all street improvement bonds expected to be outstanding during the year (including those issued in 2011), plus an amount of $220,000 to be invested in the City of Smithville’s new Investment Pool Fund for eventual bond redemption ($370,000 in total). The budget also provided for estimated earnings of $6,600 on the Street Improvement Debt Service Fund’s equity in pooled investments of the Investment Pool Fund. No premium or accrued interest on bonds sold is included in the 2012 estimated other financing sources or estimated revenues; if the Street Improvement Debt Service Fund does receive such items, they will be invested and used for eventual bond redemption and the budget will be amended accordingly to reflect such items.