Question

Residents of Green Acres, a gated community located in the City of Foothills, voted to form a local improvement district to fund the construction of a neighborhood park. The city agreed to administer the bonded debt; however, residents of Green Acres are solely responsible for repaying the bond issue. The following events are related to the special assessment park debt for the current fiscal year: On January 1, the city assessed levies totaling $5,000,000 on properties within Green Acres. The levies are payable in 10 equal annual installments due at the end of the fiscal year, beginning in the current year, with 5 percent interest due on unpaid installments. All assessments associated with the current year’s installment were collected by December 31, as was the interest due on the unpaid installments. A portion of assessments receivable equal to next year’s installment of $500,000 was reclassified as current. On December 31, the first principal payment of $500,000 was made to bondholders, as was interest on the debt. All additions and deductions were recorded by the custodial fund. Assume that all additions and deductions can be aggregated because resources are held less than three months. Prepare journal entries for each of the foregoing events for the city. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Record the amount due to the special assessment bondholders.

b. Record the amount collected against assessment and interest payable.

c. Record the installment of $500,000 reclassified as current.

d. Record the principal and interest paid to the bondholders.

e. Record the additions and deductions by the custodial fund.

Answer 1

SOLUTION:

NO	GENERAL JOURNAL	DEBIT	CREDIT
A)	ASSESSMENTS RECEIVABLE-------CURRENT	500000
	ASSESSMENT RECEIVABLE--------NONCURRENT	4500000
	DUE TO SPECIAL ASSESSMENT BONDHOLDERS---PRINCIPAL		5000000
B	CASH	750000
	ASSESSMENT RECIVABLE---CURRENT		500000
	DUE TO SPECIAL ASSESSMENT BONDHOLDERS---INTREST		250000
C	ASSESSMENTS RECEIVABLE---CURRENT	500000
	ASSESSMENTS RECIVABLES---NONCURRENT		500000
D	DUE TO SPECIAL ASSESSMENT BONDHOLDERS---PRINCIPAL	500000
	DUE TO SPECIAL ASSESSMENT BONDHOLDERS---INTREST	250000
	CASH		750000
E	DEDUCTIONS - PAYMENTS OF PRINCIPAL	500000
	DEDUCTIONS-PAYMENTS OF INTREST	250000
	ADDITIONS- INSTALLMENT COLLECTION (PRINCIPAL AND INTREST COLLECTION)		750000

  THANK YOU, PLEASE VOTEUP!!!!!!!