Question

2. The City of Shelby had the following transactions related to the construction of a new courthouse. (a) 1/2/2018: 20 year 5% General Obligation Serial Bonds with a face value of $6,000,000 are issued at 102. Interest and principal payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due (b) 3/1/2018: Land is purchased for a new courthouse at a cost of $ 550,000. (c) 3/1/2018: A contract is signed for construction of the new courthouse in the amount of $ 4,400,000 (d) 6/15/2018: Cash sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e) 7/1/2018: Interest ($150,000) and principal ($150,000) are paid on the courthouse fund serial bonds. (1) 12/1/2018: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $2,700,000. (g) 12/27/2018: $156,000 is transferred from the General Fund for the 1/1/2019 interest payment due on the courthouse fund serial bonds. Interest is accrued as of 12/31/2018, following the exception permitted by GASB. Required: Prepare a Statement of Revenues. Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds. Assume this is the first year for each fund (beginning fund balances are zero) and the City has no other long-term debt than that described above. Use separate columns for the two funds!

Answer 1

Answer -

City Of Shelby
Capital Projects And Debt Service Funds
Statement Of Revenue Expenditures, And Changes In Fund Balance
Year Ended Dec. 31, 2018
	Courthouse capital projects fund	Courthouse bonds debt service fund
Revenue	$0	$0
Expenditures :
Capital outlay	$3250000
Debt service
Interest		$306000
Principal		$150000
Total expenditures	$3250000	$456000
Excess (Deficiency) of revenues over expenditures	($3250000)	($456000)
Other financing sources (Uses) :
Proceed of bonds	$6120000
Transfers in (out)	($120000)	$576000
Total other financing sources	$6000000	$576000
Net change I fund balance	$2750000	$120000
Fund balance-Jan. 1, 2018	$0	$0
Fund balance-Dec. 31, 2018	$2750000	$120000

Calculation :

1. Capital outlay = Purchase of land + Receive of invoice = $550000 + $2700000 = $3250000

2. Interest (debt service) = $150000 + $156000 = $306000

3. Proceed of bonds = $6120000

Here,

Assuming face value of per bond = $100

So,

No. of bonds issued = $6000000 / $100 = 60000

Bonds issued at 102 = 60000 * $102 = $6120000

4. Here, $120000 transfer from courthouse capital projects fund and transfer to courthouse bonds debt service fund.