The Village of Burksville, which has a fiscal year July 1 to June 30, sold $2,500,000 in 5 percent tax-supported bonds at par to construct an addition to its police station. The bonds were dated and issued on July 1, 2019. Interest is payable semiannually on January 1 and July 1, and the first of 10 equal annual principal payments will be made on July 1, 2020. The Village used a capital projects fund to account for the project, and a debt service fund was created to make interest and principal payments.
1. The bonds were sold on July 1, 2019.
2. The General Fund transferred an amount equal to the first interest payment on December 31, 2019. The debt service fund made the payment as of January 1, 2020.
3. The project was completed on June 15, 2020. Expenditures totaled $2,497,000. You may omit encumbrance entries.
4. The remaining balance was transferred to the debt service fund from the capital projects fund for the eventual payment of principal.
Required:
a. Prepare journal entries for the capital projects fund based on the aforementioned information. Include a closing entry.
b. Prepare journal entries for the debt service fund based on the information presented above. Include a closing entry.
c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year ended June 30, 2020, for the governmental funds (i.e., use separate columns for the General, capital projects, and debt service funds). Assume the General Fund reports the following: property tax revenues $512,000, other revenues $200,000, public safety expenditures $450,000, general government expenditures $149,000, capital expenditures $75,000, other financing uses—transfers out $50,000, and beginning fund balance $175,000.
