Question

On June 1, 2018, Brooktown levied special assessments in the amount of $500,000, payable in 10 equal annual installments beginning on June 30, 2018. The assessment installments are intended to pay principal and interest on special assessment bonds for which the town has pledged its full faith and credit should assessments be insufficient. Assuming no allowance for uncollectible receivables, the journal entry in the debt service fund on June 1, 2018 would include:

Answer 1

Answer:Dr Revenue :special assessment service $500 000

Cr Account Receivables $500 000

Step-by-step explanation:

Dr Revenue :special assessment service $500 000

Cr Account Receivables $500 000

recognizing Revenue generated from services rendered (special assessments services) which increases account receivables for Brooktown because the amount of $500 000 is payable in 10 annual instalments

$500 000 revenue will be paid in 10 equal instalments, 500 000/10 =

$50 000.

When the the first instalment is received on the 30th of June 2018, the following journal would be processed

Dr Bank $50 000

Cr Account receivable $50 000