[jessanqi]

Why the money transfer from general account are not the revenue for debt service fund?

Thank you for the help!!!

The following events relating to the City of service funds occurred during the year ended 20X5:
Debt principal matured $2,000,000
Unmatured (accrued) interest on outstanding debt at Jan. 1, 20X5 $50,000
Interest on matured debt $900,000
Unmatured (accrued) interest on outstanding debt at Dec. 31, 20X5 $100,000
Interest revenue from investments $600,000
Cash transferred from general fund for retirement of debt principal $1,000,000
Cash transferred from general fund for payment of matured interest $900,000

All principal and interest due in 20X5 were paid on time.

How much revenue should Albury’s debt service funds record for the year ended December 31, 20X5?

A. $600,000
B. $1,600,000
C. $1,900,000
D. $2,500,000

Explanation
The correct answer is A. Revenues in a debt service fund are recognized when they are measurable and available. Interest earned from investments of $600,000, would properly be considered to be revenues of the debt service funds.

[abanhiqbal]

When a government fund is transferring money to another (GRaSPP) it is considered a transfer. A transfer is considered an expense or revenue when it is being transferred to or from a proprietary or fiduciary fund. Fiduciary funds record these as “additions” or “subtractions” when received or given to another fund. Hope this helps.

The correct JE reflected in the debt service fund for the received transfer of the general fund is:

Dr. Cash 1,900,000
Cr. Other financing sources 1,900,000

[jessanqi]

Thank so much for the explanation!!! 🙂

[Author]

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