Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, debt Service, and Permanent

Capital projects funds are established by a governmental unit to account for all plant and equipment acquired by construction." Do you agree? Why or why not?

Use the following to answer the next four questions: On April 1, 2012, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2012, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2012, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2013. -In addition to reporting a $4,000,000 liability and a $40,000 bond premium in the government-wide Statement of Net Assets,how would the bond sale be reported?

On January 1,2012,the Town of Walton issued $4,000,000 of 4% tax supported bonds.The bonds are dated January 1,2012 with interest payment dates of June 30 and December 31.The first of 10 annual principal payments is due on December 31,2012.The bonds were sold at a $32,000 premium that was transferred to the Debt Service Fund from the capital projects fund to be used to fund the first payment.Cash sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund on June 1st. Required: Record any and all entries to be made by the Debt Service Fund for the bond issued for the year 2012 (including closing entries)

Use the following to answer the next six questions: During the fiscal year ended December 31, 2012, the City of Johnstown issued 6% general obligation serial bonds in the amount of $3,000,000 at 101 ($3,030,000) and used $2,970,000 of the proceeds to construct a fire station. The $30,000 premium was transferred to a debt service fund. The $30,000 left in the capital projects fund at the end of the project was transferred to the debt service fund. The bonds were dated April 1, 2012 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2013. -How would the $3,000,000 bond sale be recorded?

What would be the amount of debt service expenditures reported in the fiscal year ended June 30,2013?

Use the following to answer the next four questions: On April 1, 2012, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2012, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2012, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2013. -How would the $3,990,000 be accounted for?

When bonds are sold to construct a capital asset through a capital projects fund,an entry would be made to debit Cash and credit Bonds Payable in the capital projects fund. FALSE

The principal of permanent funds must be classified as Nonspendable Fund Balance.

Which of the following should be accounted for in a permanent fund?

Which of the following lease criteria would not qualify a lease as a capital lease?

With respect to Debt Service Funds,which of the following is true?

Private-purpose Trust Funds benefit individuals,private organizations,or other governments.

Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a (an):

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an):

Capital projects funds use the financial resources measurement focus and accrual basis of accounting.

Governmental funds recognize encumbrances and expenditures,not expenses.

The principal of permanent funds are classified as Nonspendable Fund Balance.

When a government acquires general fixed assets under a capital lease agreement,the asset should be recorded in the government-wide financial statements:

How should the acquisition of general fixed assets acquired by capital leases be accounted for?

A _________ exists when new debt is issued and the proceeds are used to call the existing debt.