Question

On June 1, 2019, the City of Allentown, PA issued at par, a ten-year, 5.5%, $5,000,000 in serial bonds, with interest payable semi-annually on June 1 and December 1. In addition, the bonds will mature in equal installments every June 1 over the term of the bond. The City of Allentown has a fiscal year end at December 31.
Required:
1. Journalize the following bond transactions both in the Debt Services Fund and at the government-wide (Governmental Activities) level. To receive credit, show all of your calculations in good form. Round all amounts to the nearest dollar.
a. December 1, 2019 entry in the Debt Services Fund:
b. December 1, 2019 entry in the government-wide (Governmental Activities) level:
c. December 31, 2019 entry in the government-wide (Governmental Activities) level:
d. June 1, 2020 entry in the Debt Services Fund:
e. June 1, 2020 entry in the government-wide (Governmental Activities) level:
f. December 1, 2020 entry in the Debt Services Fund:
g. December 1, 2020 entry in the government-wide (Governmental Activities) level:
h. December 31, 2020 entry in the government-wide (Governmental Activities) level:

Answer 1

Answer and explanation:

Check the attached file for a well formatted answer

1 December 1, 2017 entry in Debt service fund  

Expenditure-Bond Interest $137,500  

Cash  $137,500

Semiannual interest rate = 5.5%/2 = 2.75%  

Interest = $5 million x 2.75% = $137500  

2 December 1, 2017 entry in government wide level  

Expenses-Interest on long term debt $137,500  

Cash  $137,500

3 December 31, 2017 entry in the government-wide level  

Expenses-Interest on long term debt $22,917  

Accrued Interest payable  $22,917

1 month accrued interest on bond = ($5 million x 5.5%)/12 =$22917

4 June 1, 2018 entry in Debt service fund  

Expenditure-Bond principal $500,000  

Expenditure-Bond interest $137,500  

Cash  $637,500

Cash $637,500  

Due from General fund  $637,500

5 June 1, 2018 entry in government-wide level  

Expenses-Interest on long term debt $137,500  

Serial Bonds Payable $500,000  

Cash  $637,500

6 December 1, 2018 entry in Debt service fund  

Expenditure-Bond Interest $123,750  

Cash  $123,750

Semiannual interest rate = 5.5%/2 = 2.75%  

Interest = $4.5 million x 2.75% = $123750  

7 December 1, 2018 entry in government wide level  

Expenses-Interest on long term debt $123,750  

Cash  $123,750

8 December 31, 2018 entry in the government-wide level  

Expenses-Interest on long term debt $20,625  

Accrued Interest payable  $20,625

1 month accrued interest on bond = ($4.5 million x 5.5%)/12 =$20625