ACC548 Week 3 Exercise Complete Solution

Question: #1681

EX. 8-4

Both the reported value of long-term debt and periodic interest Charges should be based on unamortized issue price (plus or minus Unamortized premiums or discounts) and initial yield. The City of Fairfield issued $100 million of 20-year, 6 percent coupon bonds (3 percent per semiannual period) for $89.32 million. The price reflected a yield of 7 percent (3.5 percent period semiannual period).

1. Prepare entries to reflect how the following would be reported in the city’s government-wide statements:

a. The issuance of the bond

b. The first semiannual payment of interest

c. The second semiannual payment of interest

2. Prepare entries to account for the same transactions in an appropriate governmental fund.

EX. 8-4

Both the reported value of long-term debt and periodic interest Charges should be based on unamortized issue price (plus or minus Unamortized premiums or discounts) and initial yield. The City of Fairfield issued $100 million of 20-year, 6 percent coupon bonds (3 percent per semiannual period) for $89.32 million. The price reflected a yield of 7 percent (3.5 percent period semiannual period).

1. Prepare entries to reflect how the following would be reported in the city’s government-wide statements:

a. The issuance of the bond

b. The first semiannual payment of interest

c. The second semiannual payment of interest

2. Prepare entries to account for the same transactions in an appropriate governmental fund.

Solution: #1667

ACC548 Week 3 Exercise Complete Solution

Answer 1. Government wide Statement a Cash 89320000 Bonds Payabl...