Government Accounting

1. Welcome To My
Presentation

2. Topics
1. Debt Service Funds
2. Types Of General Long Term Debt Obligation
3. Math View

3. Debt Service Funds
• Debt service funds account for the accumulation and use of resources for the
payment of general long term debt principal and interest. A government may have
several types of general long term debt obligations , as follows :
• Serial Bonds
• Term Bonds
• Special Assessment Bonds
• Notes and Warrants
• Capital Leases

4. Types Of General Long Term Debt Obligation
• Serial Bonds The most common form of debt issued by government is in
the form of serial bonds. The bonds are repaid in installments over the life
of debt.
• Terms Bonds This form of bond are less frequent than in the past. The
entire principal of the debt is due at the maturity date.
• Special Assessment Bonds May be used to finance capital or to
acquire other assets, such as ambulances or fire engines. Special assessment
bonds sold to acquire enterprise fund assets.

5. Types Of General Long Term Debt Obligation
• Notes and Warrants These consist of debt typically issued for one or two
years. These debt are usually secured by specific tax revenue, which may be used
only to repay the debt.
• Capital Leases Governmental units must records capital leases in accordance
with generally accepted accounting principles. These lease become long terms
liabilities of the government units.

6. Capital Projects Funds Entries
• York established a capital projects fund for the construction of a walkway over Kish
Avenue from the courthouse to the parking garage. The estimated cost is Tk.
300,000. The county commission agreed to provide a Tk. 100,000 grant. A 9
percent, Tk. 200,000 bond issue was sold at Tk. 5,000 premium. The York City
Council awarded a construction contract for Tk. 275,000 on March 1, 2017. The
walkway was completed on November 10, 2017, its actual cost was Tk. 282,000. The
city council approved payment of extra cost. The walkway was carpeted at a cost of
Tk. 7,400. On December 15, 2017, the city council gave the final approval to pay for
the walkway. The fund balance was transferred to the debt service fund.

7. Requirements
Prepare entries for the capital projects fund to records the following :
a. Receipt of the county grant, sale of the bonds and transfer of the
bond premium.
b. Issue of the construction contract, actual cost, carpeting and
payment.
c. Closing of the nominal accounts.
d. Transfer of the balance to the debt service fund.

8. Solution
a. Entries to record receipt of grant, bond sale and transfer of the bond premium:
Cash 10,000
Revenue --- County Grant 10,000
Cash 2,05,000
Other Financing Source---Bond Issue 2,00,000
Other Financing Source---Bond Premium 5,000
Other Financing Use---Transfer Out To Debt Service Fund 5,000
Cash 5,000
[ Transfer premium to debt service fund ]

9. Solution (page 2)
b. Entries to record construction :
March 1, 2017
Encumbrances 275,000
Budgetary Fund Balance--
Reserve For Encumbrances 275,000
November 10, 2017
Budgetary Fund Balance--
Reserve For Encumbrances 275,000
Encumbrances 275,000
Expenditures 282,000
Contract Payable 282,000
Expenditures 7,400
Vouchers Payable 7,400
December 15, 2017
Contract Payable 282,000
Vouchers Payable 7,400
Cash 289,400

10. Solution (page 3)
c. Close Nominal Accounts:
Revenue---County Grant 100,000
Other Financing Source---Bond Issue 2,00,000
Other Financing Source---Bond Premium 5,000
Fund Balance---Unreserved 305,000
Fund Balance---Unreserved 294,400
Expenditures 289,400
Other Financing Use---Transfer Out To Debt Service Fund 5,000

11. Solution (page 4)
d. Transfer of ending balance and close transfer account:
Other Financing Use---Transfer Out To Debt Service Fund 10,600
Cash 10,600
Fund Balance---Unreserved 10,600
Other Financing Use---Transfer Out To Debt Service Fund 10,600

12. Solution (page 5)
Fund Balance---Unreserved ( Cr. ) 305,000
Fund Balance---Unreserved ( Dr. ) 294,400
10,600

13. Thanks To All