Chapter 8 - Debt Service Funds Solutions Manual

CHAPTER 8 DEBT SERVICE FUNDS ANSWERS TO QUESTIONS Question 8-1

GAAP identifies the purpose of Debt Service Funds as being “to account for and report financial resources that are restricted, committed, committed, or assigned assigned to expenditure for principa principall and interest” [on general gener al longterm liabilities liabilities!" !" #nl$ general government gove rnment longterm liabil liabilities ities %those being repaid b$ governmental fund resources& are serviced through Debt Service Funds" GAAP re'uires that that a Debt Service Fund be used to account for debt service on general longterm longterm liabilities liabilities if either of o f the follo(ing is true) %a& *se of Debt Service Service Fund is is legall legall$ $ or contractuall$ mandated %b& +esources are being being accumulated accumulated currentl$ currentl$ to be used for debt service service re'uirements in the future" *se of a Debt Service Fund related to general gener al longterm liabiliti liabilities es is never prohibited" A government ma$ (ant to use a Debt Service Fund for a serial bond issue, even if it is not re'uired to do d o so, in order to better manage and control its debt service service b$ accounting for all all debt service service in Debt Service Funds" n this manner all general government debt service se rvice (ould be financed financed and accounted for through Debt Service Funds, not some through the General Fund or Special +evenue Funds and some through Debt Service Funds" Funds" -oo, transferring transferring resources from from the General Fund or Special +evenue Funds to the Debt Service Funds avoids the possibilit$ of resources resourc es needed for debt service being used for other purposes" purpose s" Finall$, Finall$, man$ tas.s/from reconciling accounts (ith fiscal agents to auditing debt service transactions/are facilitated b$ accounting for all general government debt service in Debt Service Funds" Question 8-2

-he main sources of assets for a Debt Service Fund t$picall$ are contributions from other funds, taxes, and earnings on invested assets" +efunding bond proceeds usuall$ are the main sources of assets for a refunding Debt Service Fund" Question 8-3

a" Fixed rate debt issues bear the same interest rate from issuance to maturit$, (hereas the interest rate of variable rate issues varies in accordance (ith some agreed index/such as a certain ban.0s prime rate or a specified federal securit$ interest rate/during the life of the variable rate issue" b"

serial and term bonds usuall$ are issued to $ield approximatel$ their par %face& Conventional serial amount, since interest is paid annuall$ or semiannuall$, (hereas deep discount bonds are issued at substantiall$ less than par %face& because both the principal and much, much, if not all, of the accumulated compound interest for for the life of the issue are paid at its its maturity" Question 8- 1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

478

Governments are permitted permitted %but not re'uired& to accrue unmatured interest %and principal& principal& on general longterm liabilities liabilities if t(o conditions c onditions are met" First, the interest pa$ment must be due (ithin one month after the fiscal $earend" Second, Secon d, the government must have sufficient sufficient dedicated resources set aside in a Debt Service Fund to provide for ma.ing the pa$ments (hen the$ are due" Question 8-!

nterest pa$able normall$ is recorded when due. nterest should not be be accrued at the December 84 $ear end in the case described for Allen 9it$ because the pa$ment is not due (ithin a month after $ear end" -he reason is that that taxes t$picall$ t$picall$ are levied levied for, or other resources provided to, the Debt Service Fund in the $ear in (hich the interest pa$ment comes due" -o accrue the interest expenditure expenditure and liabilit liabilit$ $ at the end of :ear 4/(hen the resources are to be provided to the Debt Service Fund in :ear 2/(ould cause the Debt Service Fund to report an un(arranted deficit" -oo, the interest pa$able (ould not properl$ pro perl$ be classified classified as a fund liabilit$ liabilit$ at the end of :ear 4, since its pa$ment in :ear 2 (ill not re'uire use of assets existing at the end of :ear 4 but (ill be financed b$ assets arising in :ear 2" Governments are permitted, permitted, but not re'uired, to accrue unmatured principal principal and interest pa$ments pa$ments due (ithin (ithin the first first month of the next fisca fiscall $ear $ear if dedicated resources are set aside in a Debt Service Fund to provide pr ovide for the pa$ments (hen due" -herefore, -herefore , if Allen 9it$;s debt service pa$ment pa$ment (ere due on
a"

A Governm Governmenta entall *nit *nit migh mightt (ant (ant to refund refund an outstandi outstanding ng term term bond issue issue at maturity because it has not accumulated suffici sufficient ent assets in in a Debt Service Fund Fund to retire the term bond issue" ndividual ndividual maturities maturities of serial serial bonds bonds (ould rarel$ (arrant refunding" refunding"

b"

A Governmental Governmental *nit *nit might might (ant to refund either a term bond or serial serial bond issue issue prior to c onditions are more favorable favorable no( than %l& maturity because interest rates or other mar.et conditions (hen the bonds (ere issued or %2& the$ are expected to be in the future, e"g", (hen bonds might need to be issued to refund a term bond issue at maturit$" Such refundings ma$ result in an >economic gain"> n addition, bonds outstanding out standing ma$ have highl$ highl$ restrictive %on the government& provisions %covenants& in the bond indentures that (ould not be re'uired b$ investors in a ne( %refunding& bond issue" -hus, the government gov ernment could relieve itself of such restrictive bond covenant provisions through a refunding bond issue" Finall$, Finall$, a Governmental *nit ma$ refund refund bond issues prior to maturit$ to >restructure> or >rearrange> the amounts and timing of future annual debt service re'uirements"

1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

47?

Question 8-#

a"

-he appreciation appreciation in in value value of sin.ing sin.ing fund securities securities should should be be recorded in the DSF accounts accounts if the investments are sub@ect to the fair value accounting re'uirements of GAS Statement Statement No. 31, discussed in 9hapter ="

b"

-he ans(er is the same for securities that have declined in value"

Question 8-8

Formal budgetar$ control of Debt Service Funds is not ordinaril$ needed, unless re'uired b$ la(, because) 4" the expenditures that must be financ financed ed are .no(n precisel$ precisel$ in advance in the case of fixed fixed rate serial debtB 2" the financing financing re'uirements re'uirements of sin.in sin.ing g funds for fixed fixed rate term debt are li.e(ise li.e(ise .no(n in advanceB and 8" the revenue sources sources t$picall$ t$picall$ are fe(, such such as propert$ taxes and interest, (ith (ith the additional additional amounts needed coming from interfund transfers, (hich are sub@ect to budgetar$ control in the transferor %pa$er& funds" -hus, DSF budgetar$ control accounts are not essential, unless unless re'uired b$ la(, la(, except (here the$ serve useful management control purposes" Question 8-$

>Defeasance> means that a debt is legall$ satisfied, and an$ related liens and indenture provisions are released, (ithout the debt having actuall$ been retired" Legal defeasance is accomplished b$ fulfilling the >defeasance> provisions of the bond indenture" -he specific in substance defeasance re'uirements of the related GAS standard must be met in an insubstance defeasance" -hese re'uirements include include

4" -he debtor must irrevocabl$ irrevocabl$ place suffi sufficien cientt cash or other assets (ith (ith an escro( escro( agent in a trust in an amount that, along (ith interest earned, (ill provide for all future debt service pa$ments pa$ments on the debt" 2" -he sole use of the trust must be to satisf$ satisf$ scheduled principal principal and and interest interest pa$ments pa$ments on the debt" 8" -he noncash assets are lim limited ited to monetar$ assets assets that are ris.free ris.free as to the amount, timing timing,, and collection of interest and principal and denominated in the same currenc$ as the debt" ?" -he maturities maturities of the noncash noncash monetar$ monetar$ assets assets must match the scheduled maturities maturities of principal principal and and interest on the debt"


47=

Question 8-1%

A refunding transaction occurs (hen ne( debt is issued, and the proceeds of the >ne(> debt issue are used to repa$ previousl$ outstanding %>old>& debt" f the >old> debt is being repaid at its maturit$, the refunding transaction is referred to as a current refunding " f the >old> debt is not due currentl$, in (hich case the old bonds are called or the proceeds of the ne( debt t$picall$ are placed in escro( (ith a trustee or agent %that meet the GAS in substance defeasance re'uirements& and used to ma.e principal and interest pa$ments in the future, the refunding transaction is referred to as an advance refunding " Question 8-11

oth bond principal and interest to be paid (ithin the first month of the next $ear may be accrued as expenditures and current liabilities of a Debt Service Fund if the$ are to be paid from assets currentl$ in the Debt Service Fund that are dedicated for that purpose" -he$ should not be accrued if the$ are not to be paid from dedicated assets in the fund at $ear end" Ci.e(ise, bond principal and interest on general longterm liabilities that is due more than one month after $ear end should not be accrued" Question 8-12

-he to(n of Sin.ing 9ree. has the option of accruing the interest and the principal due on
Deep discount debt is primaril$ bonds and notes (ith a stated %face& interest rate e'ual to less than E= of the effective rate of interest" ero coupon bonds are one of the better .no(n examples" Debt service expenditures on deep discount debt should be recogniHed in the period that the pa$ments mature %i"e", >(hen due>&" Accrual is permitted onl$ if the pa$ment is due in the first month of the next fiscal $ear and the pa$ment is to be made from resources dedicated for that purpose and set aside in a Debt Service Fund" Question 8-1

-he balance remaining in a Debt Service Fund after the bonds mature and are paid (ould be disposed of in accordance (ith legal and contractual re'uirements" f permitted b$ the la( and bond indenture, the balance (ould ordinaril$ be transferred to another Debt Service Fund/ though sometimes the balance ma$ be transferred to the General Fund"


47I

Question 8-1!

-he face value and an$ premium of a refunding bond issue are reported as other financing sources in the statement of revenues, expenditures, and changes in fund balance" A discount, if an$, should be reported as an other financing use, and expenditures reported for an$ bond issue costs on the refunding issue" -he account title used for the source or use should indicate that the bonds are refunding bonds %e"g", refunding bond and premium on refunding bonds&" -he pa$ment to retire or defease old debt should be reported as an other financing use to the extent that it is financed from the net refunding bond proceeds" Pa$ments in excess of the net refunding bond proceeds are reported as expenditures"

SO&UTIONS TO E'ERCISES E(e)*ise 8-1

4" 2" 8" ?" =" I" E" 7"

e a c c f d a d

E(e)*ise 8-2

Debt Service Funds normall$ are used for tems 4, 8" tems 2, ?, and I t$picall$ (ould be accounted for in the General Fund" tem = (ould be accounted for in an Agenc$ Fund as the government is acting solel$ as an intermediar$ bet(een the taxpa$ers and the bondholders" tem E should be accounted for in the 5nterprise Fund, and tem 7 should be accounted for in a 9apital Pro@ects Fund"


47E

E(e)*ise 8-3

A" #ther Financing *se"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J48,333,333

" #ther Financing *se""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditure""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

47,333,333 2,333,333

9"

#ther Financing *se""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditure""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

4I,333,333 2,333,333

D"

#ther Financing *se"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

23,333,333

5"


=,333,333 43,333,333

F"


7,333,333 ?,333,333

E(e)*ise 8-

4" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""=3,333,333 #ther Financing Sources/+efunding onds""""""""""""""""""""""""" -o record issuance of refunding bonds"

=3,333,333

2" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""=,333,333 #ther Financing Sources/-ransfers n""""""""""""""""""""""""""""""""" -o record transfer from General Fund"

=,333,333

8" #ther Financing *ses/Pa$ment to +efunded ond 5scro( Agent"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/Pa$ment to +efunded ond 5scro( Agent"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record pa$ment to escro( agent to defease bonds in substance"

=3,333,333


477

=,333,333 ==,333,333

E(e)*ise 8-!

4" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""E,?23,333 5xpenditures/ond ssue 9osts"""""""""""""""""""""""""""""""""""""""""" #ther Financing Sources/+efunding onds""""""""""""""""" #ther Financing Sources/+efunding ond Premium""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record issuance of refunding bonds"

I3,333 E,833,333 473,333

2" 5xpenditures/nterestK""""""""""""""""""""""""""""""""""""""""""""""""""""""" #ther Financing *ses/ond Principal +etirement"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record retirement of refunding bonds"

?23,333 E,333,333 E,?23,333

Lote that other financing uses are not reported for interest due that is financed (ith borro(ed resources" -his creates ne( debt rather than substituting ne( debt for old debt" E(e)*ise 8-"

4" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues/Propert$ -axes"""""""""""""""""""""""""""""""""""""" -o record lev$ and collection of propert$ taxes"

J4=,333,333

2" nvestments""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record purchase of investments"

4?,=33,333

8" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestments"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record maturit$ of investments"

E,333,333

?" 5xpenditures/Debt Service/Principal""""""""""""""""""""""""" 5xpenditures/Debt Service/nterest""""""""""""""""""""""""""" 9ash""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record pa$ment of longterm debt principal and interest"

?,M33,333 2,?33,333

J4=,333,333

4?,=33,333

E,333,333

E,833,333

=" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues/nvestment ncome""""""""""""""""""""""""""""""" -o record collection of interest"

I33,333

I" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestments"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record maturit$ of investments"

E,333,333


47M

I33,333

E,333,333

E(e)*ise 8-" +Continue,

E" 5xpenditures/Debt Service/Principal""""""""""""""""""""""""" ?,M33,333 5xpenditures/Debt Service/nterest""""""""""""""""""""""""""" 2,4I3,333 9ash""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" E,3I3,333 -o record pa$ment of longterm debt principal and interest" Lote that the pa$ment due date is more than a month into the next fiscal $ear, therefore, the government does not have the option of accruing that pa$ment at $ear end" 7" +evenues/nvestment ncome/Decrease in Fair Nalue nvestments"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record decline in fair value of investments"

4E=,333 4E=,333

E(e)*ise 8-#

St" Coue$ ndependent School District De.t Se)/i*e Fun, St0teent o Re/enues E(4en,itu)es 0n, C50n6es in Fun, B070n*e For the :ear 5nded December 84, 234 +evenues Propert$ -axes 9ount$ Appropriation State Appropriation nvestment ncome 5xpenditures/Debt Service Principal nterest 5xcess of +evenues over %under& 5xpenditures #ther Financing Source/-ransfer from General Fund 9hange in Fund alance Fund alance,
J4?,M74,IE= 2II,37? 4,?E7,4=E =72,833 4M,3?3,333 4?,423,333


4M3

J4E,837,24I

88,4I3,333 %4=,7=4,E7?& =33,333 %4=,8=4,E7?& I4,EI8,=M4 J?I,?44,73E

SO&UTIONS TO PROB&ES P)o.7e 8-1

4" b 2" d 8" b ?" b =" d I" d E" e 7" c M" d 43" c P)o.7e 8-2

Lo"

Date

Accounts

Dr"

4" IO27O3

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues/-axes """"""""""""""""""""""""""""""""""""""""""""""""" -o record receipt of taxes" %Note 0

2" IO2MO3

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from Special +evenue Fund """"""""""""""""""" -o record transfer received" %Note 0&

8" EO2O3

5xpenditures/nterest on onds"""""""""""""""""""""""""" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record semiannual interest pa$ment" 9alculation) %4O2&%"37&%J=33,333&  J23,333

?" EO8O3

nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record investing available cash"

=" 42O83O3

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues/nterest on nvestments """"""""""""""""""""" -o record maturit$ of investments and interest received"


4M4

9r"

=2,333 =2,333

87,333 87,333

23,333 23,333

E3,333 E3,333

E8,333 E3,333 8,333

P)o.7e 8-2 +*ontinue,

Lo" Date Accounts I" 4O2O4 5xpenditures/ond Principal """"""""""""""""""""""""""""" 5xpenditures/nterest on onds """"""""""""""""""""""""""""""""""""""""" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record debt service expenditure"

Dr" =3,333 23,333

9r"

E3,333

9alculation) ond principal """"""""""""""""""""""""""""""""""""""""""""""" J=3,333 nterest %4O2&%"37&%J=33,333& """""""""""""""""""""""" 23,333 JE3,333 Ea" 4O2O:3

Eb"

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o li'uidate investments"

83,333

5xpenditures/ond Principal """""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/nterest on onds """"""""""""""""""""""""""""""""""""""""" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record final bond principal and interest pa$ment"

=3,333 2,333

83,333

=2,333

9alculation) ond principal """"""""""""""""""""""""""""""""""""""""""""""" J=3,333 nterest %4O2&%"37&%J=3,333& """""""""""""""""""""""""" 2,333 J=2,333 7a"

-ransfer to Special +evenue Fund """""""""""""""""""""""""""""""""""""""" 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o transfer remaining assets to Special +evenue Fund" %Note .&

8,333

7b" 4O8O:3 -ransfer from Special +evenue Fund"""""""""""""""""""" +evenues/-axes """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer to Special +evenue Fund """""""""""""""""""""""" 5xpenditures/ond Principal """"""""""""""""""""""""""""" 5xpenditures/nterest on onds """""""""""""""""""""""" -o close the operating accounts"

83,333 2=,333

8,333

8,333 =3,333 2,333

Notes)

a"

Alternativel$, a correct solution to entries 4 and 2 might first present %or assume& an entr$ accruing the taxes receivable and transfer, then record the collection of the receivable"

b"

Let assets at 4O2O:3 %J83,333 Q J2=,333  J==,333& less pa$ment on 4O8O:3 %J=2,333&  +emaining assets for transfer upon termination of fund %J8,333&


4M2

P)o.7e 8-3 +0

6atcher Nillage =:ear Lote Debt Service Fund General
Lo" l"

Accounts

Dr"

udgetar$ 5ntr$ 5stimated General Fund -ransfer """""""""""""""""""""""""""""""""""""""""""""""" 5stimated -ax +evenues """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Appropriations """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" *nreserved Fund alance """""""""""""""""""""""""""""""""""""""""""""""""""""" -o record budget"

9r"

43,333 47,333 2E,I33 ?33

9alculations) Appropriations) Principal, EO=O? and 4O=O= """""""""""""""""""""""""""""""""""J23,333 nterest, EO=O? %4O2&%"37&%Jl33,333& """""""""""""""""""""""""""""""""""" ?,333 nterest, lO=O=, %4O2&%"37&%JM3,333& """"""""""""""""""""""""""""""""""""" 8,I33 J2E,I33 2" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues/-axes """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record receipt of taxes" %Note 1&

23,333 23,333

Assumption) All taxes levied (ere collected" 8" 5xpenditures/Lote Principal """"""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/nterest on Lote """""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record pa$ment of matured note principal and interest pa$able"

43,333 ?,333

?" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from General Fund """""""""""""""""""""""""""""""""""""""""""""""""" -o record transfer from General Fund"

43,333

=" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""I,333 -ransfer from 9apital Pro@ects Fund """"""""""""""""""""""""""""""""""""" -o record transfer from discontinued 9apital Pro@ects Fund"


4M8

4?,333

43,333

I,333

P)o.7e 8-3 +0 +*ontinue,

Lo" Accounts I" 5xpenditures/Lote Principal """"""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/nterest on Lote """""""""""""""""""""""""""""""""""""""""""""""""" Ratured Lote Principal Pa$able """""""""""""""""""""""""""""""""""""""""""" Ratured nterest Pa$able """""""""""""""""""""""""""""""""""""""""""""""""""""" -o accrue note principal and interest due 4O=O23="

Dr" 43,333 8,I33

Ea" -ransfer from General Fund """""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from 9apital Pro@ects Fund """"""""""""""""""""""""""""""""""""""""""" +evenues/-axes """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" *nreserved Fund alance """""""""""""""""""""""""""""""""""""""""""""""""""""" 5stimated General Fund -ransfer """""""""""""""""""""""""""""""""""""""""" 5stimated -ax +evenues """"""""""""""""""""""""""""""""""""""""""""""""""""""" -o close revenue and transferrelated accounts" %Note 2&

43,333 I,333 23,333

Eb" Appropriations """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/Lote Principal """"""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/nterest on Lote """""""""""""""""""""""""""""""""""""""""""" -o close expenditurerelated accounts"

2E,I33

9r"

43,333 8,I33

7,333 43,333 47,333

23,333 E,I33

Notes!

4"

Alternativel$, the tax lev$ might be recorded at J23,333 or another assumed amount, follo(ed b$ a collection entr$"

2"

5ntr$%ies& E ma$ be compounded, or an$ reasonable combination of closing entries ma$ be made"


4M?

P)o.7e 8- 3 +0 +*ontinue, (Not Required)

%2& %?& %=&

%O&

9ash 23,333 l?,333 43,333 I,333 22,333 8I,333 8I,333

%8&

-ransfer from 9apital Pro@ects Fund %Ea& 43,333 43,333 %?& 4I,333 4I,333

%O&

22,333

5stimated General Fund -ransfer %4& 43,333 43,333 %Ea&

#ther Financing Sources/ -ransfer from 9apital Pro@ects Fund %Ea& I,333 I,333 %=& 4I,333 4I,333

5stimated -ax +evenues %4& 47,333 47,333 %Ea&

%Ea&

5xpenditures/nterest on Lote %8& ?,333 %I& 8,I33 E,I33 E,I33 %Eb&

*nreserved Fund alance ?33 %4& 7,333 %Ea& 7,?33

+evenues/-axes 23,333 23,333

%2&

Ratured Lote Principal Pa$able 43,333 %I&


4M=

%Eb&

Appropriations 2E,I33 2E,I33

%4&

5xpenditures/Lote Principal %8& 43,333 %I& 43,333 23,333 23,333 %Eb&

Ratured nterest Pa$able 8,I33 %I&

P)o.7e 8-3 +.

6atcher Nillage De.t Se)/i*e Fun, B070n*e S5eet December 84, 23?

Assets

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J22,333

&i0.i7ities 0n, Fun, B070n*e

Ciabilities) Ratured note principal pa$able """"""""""""""""""""""""""""""""""""""""""""""""""" Ratured interest pa$able """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J43,333 8,I33

Fund alance %Assigned&""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J48,I33 7,?33

J22,333

6atcher Nillage De.t Se)/i*e Fun, St0teent o Re/enues E(4en,itu)es 0n, C50n6es in Fun, B070n*e For the :ear 5nded December 84, 23?

+evenues) -axes """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures) Lote principal """""""""""""""""""""""""""""""""""""""""""""""""""""" """""""""""""""""""""""" nterest on note """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J23,333

J23,333 E,I33

5xcess of +evenues #ver %*nder& 5xpenditures""""""""""""""""""""""""""""""" #ther Financing Sources) -ransfer from General Fund """""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from 9apital Pro@ects Fund """"""""""""""""""""""""""""""""""""""""""" Let 9hange in Fund alance """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Fund alance/

4MI

2E,I33 %E,I33&

43,333 I,333

4I,333 7,?33 / J 7,?33

P)o.7e 8-

State of Artexva Advance +efunding Debt Service Fund General
4" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""7,733,333 5xpenditures/ond ssue 9osts""""""""""""""""""""""""""""""""""""""""""""""""" 2M3,333 #ther Financing Sources/+efunding onds """""""""""""""""""""""" M,333,333 #ther Financing Sources/+efunding ond Premium""""""""""" M3,333 -o record issuance of JM,333,333 par 23:I I refunding serial bonds at 434 less J2M3,333 issuance costs" 2" #ther Financing *ses/Pa$ment to +efunded ond 5scro( Agent """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 7,733,333 -o record pa$ment of net proceeds of 23:I refunding bond issue to escro( agent to legall$ defease J7,333,333 par of 232 43 serial bonds" 8" #ther Financing Sources/+efunding onds """""""""""""""""""""""""""""" #ther Financing Sources/+efunding ond Premium""""""""""""""""" #ther Financing *ses/Pa$ments to +efunded ond 5scro( Agent """"""""""""""""""""""""""""""""""""""""""""""""""""""" 7,733,333 5xpenditures/ond ssue 9osts""""""""""""""""""""""""""""""""""""""""""" 2M3,333 -o record closing the 23:I accounts and terminating this Debt Service Fund" ?" 5xpenditures/Pa$ment to +efunded ond 5scro( Agent """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" #ther Financing *ses/Pa$ment to +efunded ond 5scro( Agent """"""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 7,733,333 -o record pa$ment of net proceeds of 23:I refunding bond issue and of General Fund transfer to escro( agent to legall$ defease J7,333,333 par of 232 43 serial bonds" =" 5xpenditures/nterest on onds """"""""""""""""""""""""""""""""""""""""""""""" 5xpenditures/ond Principal +etirement """"""""""""""""""""""""""""""""" #ther Financing *ses/+etirement of 1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

4ME

7,733,333

M,333,333 M3,333

4,333,333 E,733,333

733,333 233,333

+efunded onds """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 7,733,333 -o record final pa$ment of interest on, and retirement of 232 43 serial bonds"


4M7

E,733,333

P)o.7e 8-! +0

Ceslie ndependent School District Debt Service Fund General
Dr" 832,333 447,333

+evenues Cedger %5stimated +evenues&) Propert$ -axes """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 2=3,333 nterest on nvestments """""""""""""""""""""""""""""""""""""""""""""""""" =2,333 832,333 5xpenditures Cedger %Appropriations&) Serial ond Principal """"""""""""""""""""""""""""""""""""""""""""""""""""" " 433,333 9apital Cease Principal [J87,M7I  %"3E&%J?33,333& """""""""""""""""""""""""""""""""" 43,M7I nterest on ndebtedness %J4M7,333 Q JI3,333 Q J27,333& """"""""""""""""""""""""" 27I,333 Fiscal Agent Fees """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" 4,MM= 8M7,M74 %2& 34O32

+evenues """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Accrued nterest +eceivable """""""""""""""""""""""""""""""""

43,333

43,333 -o reverse the 42O84O? accrual of interest receivable" %Note 1& +evenues Cedger %+evenues&) nterest on nvestments """""""""""""""""""""""""""""""""""""""""""""""""" %8& 34O32 Ratured nterest Pa$able """""""""""""""""""""""""""""""""""""" Ratured Serial onds Pa$able """""""""""""""""""""""""""""""""""""""""""""" Accrued Fiscal Agent Fees Pa$able """"""""""""""""""""""""""""""""""""""" 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 4=2,=3= -o reverse the 42O84O? accrual of bond principal and interest pa$able" %Note 2& 1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

4MM

43,333 434,=33 =3,333 4,33=

9r"

5xpenditures Cedger %5xpenditures&) nterest on ndebtedness """""""""""""""""""""""""""""""""""""""""""""""""""""""" 434,=33 Serial ond Principal """""""""""""""""""""""""""""""""""""""""""""""""""""""""" """ =3,333 Fiscal Agent Fees """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 4,33= 4=2,=3=


233

P)o.7e 8-! +0 +*ontinue,

Lo" Date %?& 34O3=

Accounts 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

Dr" 4=2,=3=

4=2,=3= -o record semiannual pa$ment of serial bond debt service" %Note 2& 5xpenditures Cedger %5xpenditures&) nterest on ndebtedness""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 434,=33 Serial ond Principal """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" =3,333 Fiscal Agent Fees """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 4,33= 4=2,=3= %=& 32O42

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from General Fund """""""""""""""""""""""""""""""""

447,333

447,333 -o record receipt of transfer" %I& 32O42

nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

447,333

447,333 -o record investment of cash transferred in" %E&

32O42

%7& 38O2?

+estricted fund balance (ill be increased b$ the J24,34M re'uired increase to the Sin.ing Fund +eserve, (hich ma$ or ma$ not be maintained in the accounts" 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

87,M7I

87,M7I -o record annual pa$ment on capital lease" 5xpenditures Cedger %5xpenditures&) 9apital Cease Principal """""""""""""""""""""""""""""""""""""""""""""""""""""""""" nterest on ndebtedness""""""""""""""""""""""""""""""""""""""""""""""""""""""""" [nterest calculation) %"3E&%J?33,333&! """"""""""""""""""""""""""""""""""


234

43,M7I 27,333 87,M7I

9r"

P)o.7e 8-! +0 +*ontinue,

Lo" Date %M& 3?O4=

Accounts 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestments """""""""""""""""""""""""""""""""""""""""""""""""""""""""""

Dr" E,333

E,333 -o record li'uidating investments" 9alculation) 9ash re'uired for term bond interest pa$ment """"""""""""""""""""""""""""""""""""""""""""" Rinimum cash balance permitted """"""""""""""""""""""" -otal cash re'uired"""""""""""""""""""""""""""""""""""""""""""""" 9ash on hand before investment li'uidation """""""""""""""""""""""""""""""""""""""""" Additional cash re'uired """""""""""""""""""""""""""""""""""" nvestment li'uidation %in J333s& """"""""""""""""""""""" %43&

3?O4=

5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

J83,333 =,333 J8=,333 27,=3M J I,?M4 J E,333 83,333

83,333 -o record semiannual pa$ment of interest on term bonds" 5xpenditures Cedger %5xpenditures&) nterest on ndebtedness """""""""""""""""""""""""""""""""""""""""""""""""""""""" %44&

3=O37

9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" +evenues" """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

83,333 2=I,333

2=I,333 -o record receipt of 23= propert$ taxes" +evenues Cedger %+evenues&) Propert$ -axes """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 2=I,333

%42&

3EO3=

5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

4=4,333

4=4,333 -o record semiannual serial bond debt service pa$ment" 5xpenditures Cedger %5xpenditures&) Serial ond Principal """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" =3,333 nterest on ndebtedness """""""""""""""""""""""""""""""""""""""""""""""""""""""" 433,333 Fiscal Agent Fees """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 4,333 4=4,333 1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

232

9r"

P)o.7e 8-! +0 +*ontinue,

Lo" %48&

Date 43O4=

Accounts 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

Dr" 83,333

83,333 -o record semiannual pa$ment of interest on term bonds" 5xpenditures Cedger %5xpenditures&) nterest on ndebtedness """""""""""""""""""""""""""""""""""""""""""""""""""""""" %4?&

42O84 9ash """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Accrued nterest +eceivable """""""""""""""""""""""""""""""""""""""""""""""""" +evenues """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" I?,333 -o record investment earnings for the $ear" %Note 1&

83,333 ?M,333 4=,333

+evenues Cedger %+evenues&) nterest on nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""" I?,333 9alculation) nterest revenue recorded 42O84"""""""""""""""""" Cess) nterest revenue reversing entr$ 4O2 " nterest revenue for 23= %given&"""""""""""""""" %4=&

42O84

JI?,333 43,333 J=?,333

nvestments """"""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

44I,333

44I,333 -o record investments of cash" 9alculation) 9ash on hand before investment/42O84"""""""""""" 5nding cash balance 42O84O= %given& """"""""""""""" Additional investments made""""""""""""""""""""""""""""""

J42M,=3M 48,=3M


238

J44I,333

9r"

P)o.7e 8-! +0 +*ontinue,

Lo"

Date

%4I&

42O84

Accounts 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" Ratured nterest Pa$able """"""""""""""""""""""""""""""""""""""

Dr"

9r"

4?7,MM=

M7,333 Ratured Serial onds Pa$able """""""""""""""""""""""""""""" =3,333 Accrued Fiscal Agent Fees Pa$able """""""""""""""""""""" -o record accrual of semiannual serial bond debt service pa$ment due 4O=OI to be paid from existing fund financial resources"

MM=

5xpenditures Cedger %5xpenditures&) Serial ond Principal """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" =3,333 nterest on ndebtedness """""""""""""""""""""""""""""""""""""""""""""""""""""""" M7,333 Fiscal Agent Fees """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" MM= 4?7,MM= %94&

%92&

42O84

C7osin6 Ent)ies9:ene)07 &e,6e)

Appropriations """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" *nreserved Fund alance """""""""""""""""""""""""""""""""""""""""""""""""""""" 5stimated +evenues """""""""""""""""""""""""""""""""""""""""""" "" 832,333 5stimated General Fund -ransfer """"""""""""""""""""""""" 447,333 -o reverse the budgetar$ entr$"

8M7,M74 24,34M

+evenues """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from General Fund """""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 8M7,M74 *nreserved Fund alance """"""""""""""""""""""""""""""""""""" 2M,34M -o close the accounts"

843,333 447,333

C7osin6 Ent)ies9Re/enues &e,6e)

%9&

Propert$ -axes""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nterest on nvestments"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 7,333 Proof) +evenues J843,333 5stimated +evenues """"""""""""""""""""""""""""""""""""""""""" 832,333 Difference """"""""""""""""""""""""""""""""""""""""""""""""""""J 7,333 1 2344 Pearson 5ducation, nc" publishing as Prentice 6all

23?

I,333 2,333

P)o.7e 8-! +0 +*ontinue, Notes!

4"

Alternativel$, the interest accrual reversing entr$ at 4O2 ma$ be omitted and Accrued nterest +eceivable increased J=,333 %from J43,333 to J4=,333& in the 42O84O= interest earnings entr$"

2"

Alternativel$, the debt service pa$able accrual reversing entr$ at 4O2 ma$ be omitted and the liabilit$ accounts %rather than 5xpenditures& ma$ be debited in the 4O= debt service pa$ment entr$"

P)o.7e 8-! +.

Ceslie ndependent School District De.t Se)/i*e Fun, B070n*e S5eet December 84, 23= Assets 9ash """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 48,=3M nvestments %net of J2=,333 unamortiHed premiums and JM,333 unamortiHed discounts& """"""""""""""""""""""""""""""""""""""""""""""""""" 7ME,333 Accrued interest receivable """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 4=,333

J

JM2=,=3M &i0.i7ities 0n, Fun, B070n*e Ciabilities) Ratured interest pa$able """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Ratured serial bonds pa$able """""""""""""""""""""""""""""""""""""""""""""""""""""" Accrued fiscal agent fees pa$able """""""""""""""""""""""""""""""""""""""""""""""" J4?7,MM=

J M7,333 =3,333

Fund alance) +estricted for term bond principal """"""""""""""""""""""""""""""""""""""""""""""" J88I,83? +estricted for serial bond service assurance """""""""""""""""""""""""""""""" 8=3,333 I7I,83? Assigned """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" M3,243 EEI,=4? JM2=,=3M


23=

MM=

P)o.7e 8-! +. +*ontinue,

Ceslie ndependent School District De.t Se)/i*e Fun, St0teent o Re/enues E(4en,itu)es 0n, C50n6es in Fun, B070n*e For :ear 5nded December 84, 23= +evenues) Propert$ taxes """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" J2=I,333 nterest on investments""""""""""""""""""""""""""""""""""""""""""""""""""""""""" =?,333 J843,333 5xpenditures) Serial bond principal """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9apital lease principal """""""""""""""""""""""""""""""""""""""""""""""""""""""""" nterest on indebtedness """"""""""""""""""""""""""""""""""""""""""""""""""""""" Fiscal agent fees """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 8M7,M74 5xcess of +evenues #ver %*nder& 5xpenditures"""""""""""""""""""""""" %77,M74& #ther Financing Sources) -ransfer from General Fund """"""""""""""""""""""""""""""""""""""""""""" """" 447,333 Let 9hange in Fund alance""""""""""""""""""""""""""""""""""""""""""""""""""""""" 2M,34M Fund alance/

23I

433,333 43,M7I 27I,333 4,MM=

P)o.7e 8-! +. +Continue, Ceslie ndependent School District De.t Se)/i*e Fun, Su.si,i0); &e,6e)s 23= Fiscal :ear Re/enues &e,6e)<

Accounts Propert$ -axes

5stimated Dr" %4&

Actual 9r"

alance 9r" %Dr"&

2=3,333 %44&

2=I,333 %9&

nterest on nvestment

%4&

=3,333 %2& %4?&

%43,333& I?,333 =?,333

=2,333

%9&

2=3,333 %I,333& I,333 / =2,333 I2,333 %2,333& 2,333 /

E(4en,itu)es &e,6e)<

Accounts

5stimated Dr"

Serial ond Principal %8& %?& %42& %4I&

%=3,333& =3,333 =3,333 =3,333 433,333

%7&

43,M7I

%8& %?& %7& %43& %42& %48& %4I&

%434,=33& 434,=33 27,333 83,333 433,333 83,333 M7,333 27I,333

%8& %?& %42& %4I&

%4,33=& 4,33= 4,333 MM= 4,MM=

9apital Cease Principal

nterest on ndebtedness

Fiscal Agent Fees

Actual 9r" %4&

433,333

433,333 =3,333 433,333 =3,333 /

%4&

43,M7I

43,M7I /

%4&

27I,333

27I,333 87E,=33 27I,333 2=7,333 227,333 427,333 M7,333 /

%4&

4,MM=

4,MM= 8,333 4,MM= MM= /


23E

*nexpended alance 9r" %Dr"&

P)o.7e 8-! +. +*ontinue,

Cegend) 4" 34O32 budgetar$ entr$" 2" 34O32 reversal of 42O84O? accrual of interest receivable" 8" 34O32 reversal of 42O84O? accrual of 4O=O= serial bond debt service pa$ment" ?" 34O3= pa$ment of serial bond debt service accrued at 42O84O?" =" 32O42 transfer from General Fund" I" 32O42 investment of cash transferred in" E" 32O42 increase of reserve to its re'uired level" 7" 38O2? annual capital lease debt service pa$ment" M 3?O4= investment li'uidation" 43" 3?O4= semiannual pa$ment of interest on term bonds" 44" 3=O37 receipt of 23= propert$ taxes" 42" 37O3= semiannual serial bond debt service pa$ment" 48" 43O4= semiannual pa$ment of interest on term bonds" 4?" 42O4= summar$ investment earnings entr$" 4=" 42O4= additional cash investments" 4I" 42O4= accrual of 4O=OI serial bond debt service pa$ment" 9" 9losing entries %94, 92, 9&

P)o.7e 8-"

roadus 9ount$ Cou)t5ouse Bon,s De.t Se)/i*e Fun, St0teent o Re/enues E(4en,itu)es 0n, C50n6es in Fun, B070n*e For the :ear 5nded December 84, 23I +evenues) Propert$ taxes """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nvestment income %J73,333  J=,333& """"""""""""""""""""""""" -otal +evenues """""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xpenditures) Principal retirement""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" nterest """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""4,233,333 Fiscal agent fees """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -otal 5xpenditures """"""""""""""""""""""""""""""""""""""""""""""""""""""""" 5xcess of +evenues #ver %*nder& 5xpenditures"""""""""""""""""""""""" #ther Financing Sources) -ransfer from General Fund """""""""""""""""""""""""""""""""""""""""" Let 9hange in Fund alance""""""""""""""""""""""""""""""""""""""""""""""""""""""" Fund alance/eginning of :ear """""""""""""""""""""""""""""""""""""""""""" Fund alance/5nd of :ear """"""""""""""""""""""""""""""""""""""""""""""""""""""

J8,3I=,333 E=,333


237

J8,4?3,333 =,333,333 E=,333 I,2E=,333 %8,48=,333& =,2=3,333 2,44=,333 4,=33,333 J8,I4=,333

P)o.7e 8-#

a"

b"

c"

A crossover refunding differs from a t$pical advance refunding in that resources in the related escro( account are dedicated, at least temporaril$, to the debt service for both the old debt and the new refunding debt. n a t$pical refunding, neither the assets placed in escro( nor the old refunded debt is reported on the face of the financial statements" -he ne( refunding debt is reported" 6o(ever, in a crossover refunding, both the old refunded debt and new refunding debt is reported on the face of the financial statements, as are the assets placed in escro(, until the crossover date" From a budgetar$ standpoint, (hile both the refunded debt and refunding debt is reported on the face of the financial statements, debt service for both must be included in the budget"

P)o.7e 8-8

Summar$ reports on this research and anal$sis problem should be evaluated in terms of the specific re'uirements" -he depth of anal$sis and understanding should be apparent/ particularl$ if several reports are evaluated concurrentl$"


23M

CASE SO&UTIONS C0se 8-1

9it$ of Ril(au.ee De.t Se)/i*e Fun, St0teent o Re/enues E(4en,itu)es 0n, C50n6e in Fun, B070n*e For the :ear 5nded December 84, 23= %amounts in thousands& +evenues Propert$ -axes #ther -axes nvestment ncome #ther 5xpenditures  Debt Service Principal nterest ond ssue 9osts

J =2,M?2 4?,IM= 8,?47 7,24? 74,23I 2M,=M8 E=3

5xcess of +evenues over %under& 5xpenditures #ther Financing Sources %*ses& +efunding onds +efunding onds Premium Pa$ment to +efunded ond 5scro( Agent -ransfers n 9hange in Fund alance Fund alance,
27,442 42,23M %8M,=E4& 84,M83

J EM,2IM

444,=?M %82,273 &

82,I73 ?33 ?8,73E J ??,23E


243

C0se 8-2

a" 4" Accrued nterest Pa$able"""""""""""""""""""""""""""""""""""""""""""""""""" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record pa$ment of accrued interest"

J882,MI?

2" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -ransfer from General Fund""""""""""""""""""""""""""""""""""""""" -o record transfer from the General Fund"

43=,8MI,I4M

8" 5xpenditures/Debt Service/Principal"""""""""""""""""""""""""" 5xpenditures/Debt Service/nterest"""""""""""""""""""""""""""" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record pa$ment of principal and interest"

42,7E7,I3= M,EEI,3I=

?" nvestments"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" 9ash"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" -o record purchase of investments"

E,833,333

=" 5xpenditures/Debt Service/nterest"""""""""""""""""""""""""""" Accrued nterest Pa$able"""""""""""""""""""""""""""""""""""""""""""" -o accrue interest on longterm debt"

823,=24

J882,MI?

43=,8MI,I4M

22,I=?,IE3

E,833,333


244

823,=24

Chapter 8 - Debt Service Funds Solutions Manual

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