Question

The Village records an outstanding Bond Liability with a book value of $10,000 (all numbers in $1,000s) at the beginning of the year that requires a principal payment of $500 per year. Its records also indicate that it borrowed $3,000 on new Bonds during the year. What two reconciliation entries must the Village include in its government-wide financial statements relating to its Bond Liability

Answer 1

The Village

The two reconciliation entries that Village must include in its government-wide financial statements relating to its Bond Liability are:

1. Debit Interest Expense $500

Credit Interest Payable $500

To record the accrued interest expense for the year.

2. Debit Cash $3,000

Credit Bond Liability $3,000

To record the issuance of new bonds during the year.

Step-by-step explanation:

a) Data and Analysis:

Beginning bond liability = $10,000

Interest Expense $500 Interest Payable $500

Cash $3,000 Bond Liability $3,000

b) The first is to accrue interest expense of $500 and record Interest Payable of $500. The second is to record the new Bonds issued during the year.