|Posted: 31 Jul 2010 at 20:49 | IP Logged
Refund Ridge Township issued General Governmental Refunding Bonds for $1,000,000 at 98 during the year ended June 30, 20X6. The Township would report the following balances in the indicated accounts in its Debt Service Fund financial statements at and for the year ended June 30, 20X6:
Bonds Payable /Discount Expenditures /Other Financing Sources
0 / 0 / 980,000
Choice 3 is correct.
Proceeds from refunding debt would be recorded net of any discount as other financing sources in the debt service fund associated with the refunded debt. The transaction associated with the issuance of the debt would appear on the Statement of Revenues, Expenditures and Changes in Fund Balance.
Choice 1 is incorrect. The non current debt, bonds payable, would not be recorded in the governmental fund financial statements, it would only be recorded in the government-wide financial statements under the governmental activities column. Other financing sources would be displayed in the amount of $980,000.
Choice 2 is incorrect. Refund bonds would be recorded in the debt service fund associated with the refunded debt. The net proceeds would be recorded as Other Financing Sources. There would be no "expenditure" recorded as a discount.
Choice 4 is incorrect. The issuance of refunding bonds would be recorded in the debt service fund financial statements as bond proceeds under the category "Other Financing Sources." It would not be either recorded exclusively on the government-wide financial statements or recorded in another fund.
What is a refunding debt ?