Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
6–16
Ch. 6, Solutions, 6-18 (Cont’d)
c. Calculation of Interfund Transfer to Debt Service Fund:
Amount of appropriation required for the interest
INTEREST EXENSE 96,000
CASH 120,000
e. The debt service fund would need to adjust its budget to account for the
premium and accrued interest received. These amounts will reduce the required
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
6–17
Ch. 6, Solutions, 6-18 (Cont’d)
6-19. a. If the lease meets one or more of the criteria prescribed in Codification
93%), the lease is properly classified as a capital lease.
MCCORMICK COUNTY
Debits Credits
b. Capital Projects Fund:
EXPENDITURES 3,348,829
OTHER FINANCING SOURCES⎯
CAPITAL LEASE AGREEMENTS 3,348,829
Debt Service Fund:
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
6–18
Ch. 6, Solutions, 6-19 (Cont’d)
Debits Credits
c. Debt Service Fund:
EXPENDITURES⎯INTEREST 155,930
EXPENDITURES⎯PRINCIPAL 594,070
Calculation: Interest Payment Unpaid
Payment Amount of on Unpaid on Lease
Number Payment Balance at 6% Principal Obligation
General Problem Information: Capital leases
Learning Objective: 6-2
Learning Objective: 6-6
Topic: Use of Debt Service Funds to Record Capital Lease Payments
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
6–19
Ch. 6, Solutions (Cont’d)
6-20. CITY OF APPLETON
STATEMENT OF LEGAL DEBT MARGIN
DECEMBER 31, 2016
ASSESSED VALUE OF PROPERTY $240,000,000
RATE OF DEBT LIMITATION 6%
AMOUNT OF DEBT LIMITATION 14,400,000
OUTSTANDING LONG–TERM INDEBTEDNESS
SUBJECT TO DEBT LIMIT:
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
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Ch. 6, Solutions, 6-20 (Cont’d)
CITY OF APPLETON
SCHEDULE OF DIRECT AND OVERLAPPING DEBT
DECEMBER 31, 2016
Governmental Unit
General
Obligation
Bonds
Estimated
Percentage
Applicable
Estimated
Share of
Overlapping
Debt
Clyde County School District
$ 15,000,000
25%
$ 3,750,000
Clyde County Health Services
8,000,000
25%
2,000,000
Regional Library
2,400,000
33.33%
800,000
Subtotal, Overlapping Debt
6,550,000
City Direct Debt
$ 9,200,000
100%
$ 9,200,000
Total Direct and Overlapping Debt
$ 15,750,000
Note: The city also has $6,600,000 ($2,700,000 + $1,900,000 + $2,000,000) of self-
General Problem Information: Legal debt margin, direct and overlapping debt
Learning Objective: 6-4
Topic: General Long-Term Liabilities
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
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Ch. 6, Solutions (Cont’d)
6-21. GRANT COUNTY
Debits Credits
a. Debt Service Fund:
ESTIMATED OTHER FINANCING SOURCES 7,125,000
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
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Ch. 6, Solutions, 6-21 (Cont’d)
e.
GRANT COUNTY
DEBT SERVICE FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES:
SALES TAXES $1,582,000
INVESTMENT EARNINGS 11,500
TOTAL REVENUES 1,593,500
EXPENDITURES:
General Problem Information: Debt Service Fund Trial balance
Learning Objective: 6-5
Learning Objective: 6-6
Topic: Section from Chapter
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN Reporting
Level of Difficulty: Medium
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
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Ch. 6, Solutions (Cont’d)
6-22. a. SANDY BEACH
Debits Credits
1. Serial Bond Debt Service Fund:
ESTIMATED OTHER FINANCING SOURCES 416,250
ESTIMATED REVENUE 1,020,000
2. Serial Bond Debt Service Fund:
CASH 213,750
OTHER FINANCING SOURCES—INTERFUND
Chapter 06 – Accounting for General Long–term Liabilities and Debt Service
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Ch. 6, Solutions, 6-22 (Cont’d)
Debits Credits
3. Serial Bond Debt Service Fund:
TAXES RECEIVABLE—CURRENT 1,020,000
4. Serial Bond Debt Service Fund & Governmental Activities:
5. Serial Bond Debt Service Fund:
CASH 202,500
OTHER FINANCING SOURCES—INTERFUND