Question

Record the following transactions on the books of a special assessment debt fund. If no entry is needed, so indicate.

1)        On January 1, the city assessed levies totaling $20,000,000 on properties in the special assessment district. The levies are payable in five equal annual installments beginning in the current year, with 8 percent interest due on the unpaid installments.

2)        All assessments associated with the current year’s installment were collected, as was the interest due on the unpaid installments.

3)        The first principal payment was made to the bondholders as was the interest on the debt.

Answer 1

Part 1

Accounts title and explanation	debit	credit
Assessments Receivable-Current (20,000,000 / 5)	4,000,000
Assessments Receivable-noncurrent (balancing figure)	16,000,000
Due to special assessments bondholders-principal		20,000,000

Part 2

Accounts title and explanation	debit	credit
Cash	5,600,000
Assessments Receivables-Current		4,000,000
Due to Special Assessments Bondholders-Interest (20,000,000 * 8%)		1,600,000
Assessments Receivables-Current	4,000,000
Assessments Receivable-noncurrent		4,000,000

Part 3

Accounts title and explanation	debit	credit
Due to Special bondholders-Interest	1,600,000
Due to Special Bondholders-Principal	4,000,000
Cash		5,600,000