Reference no: EM131703238

Question: (Journal entries, financial statements, and closing entries for a Debt Service Fund) Following are a trial balance and the transactions that relate to the City of Patin Heights' Debt Service Fund:

1. The city council of Patin Heights adopted the budget for the Debt Service Fund for 2013. The estimated revenues totaled $1,000,000, the estimated other financing sources (a transfer from the General Fund) totaled $500,000, and the appropriations totaled $202,000.

2. The $500,000 transfer from the General Fund was recorded although it had not yet been paid to the Debt Service Fund.

3. To provide additional resources to service the bond issue, a property tax was levied upon the citizens. The total levy was $1,000,000, of which $975,000 was expected to be collected.

4. Property taxes of $780,000 were collected.

5. Property tax receivables of $5,000 were written off.

6. Income received in cash from investments totaled $5,000.

7. Property taxes of $150,000 were collected.

8. The fund liability of $50,000 for interest on bonds was recorded, and that amount of cash was transferred to the fiscal agent.

9. Investment income of $3,000 was received in cash.

10. The fund liabilities for interest on bonds in the amount of $50,000 and principal in the amount of $100,000 were recorded, and cash for the total amount was transferred to the fiscal agent.

11. The fiscal agent's fee of $1,000 was accrued (credit Vouchers payable).

12. Investment revenue of $1,500 was accrued.

13. The transfer accrued in transaction 2 was collected.

14. Investments totaling $1,000,000 were purchased. Use the preceding information to do the following:

a. Prepare all the journal entries necessary to record these transactions for the Debt Service Fund.

b. Prepare a trial balance for the Debt Service Fund as of December 31, 2013.

c. Prepare a statement of revenues, expenditures, and changes in fund balance for 2013 and a balance sheet as of December 31, 2013, for the Debt Service Fund (assume all fund balance is restricted).

d. Prepare closing entries for the Debt Service Fund.