Beachfront property owners of the Town of Eden Beach requested a seawall be constructed to protect their beach. The seawall was financed through a note payable, which was to be repaid from taxes raised through a special assessment on their properties. The Town guarantees the debt and accounts for the special assessment through a debt service fund. Assume the special assessments were levied in 2016, recording a special assessment receivable and deferred inflow in the amount of $456,000. One-third of the assessment is to be collected each year and used to pay the interest and principal on the note. Record the following transactions that occurred in 2017:
June 30, $152,000 of the assessments became due and currently receivable. (Hint: The special assessment tax is recorded as revenue in the debt service fund when it becomes due.)
July 31, the $152,000 was collected.
September 30, interest of $22,800 and principal of $129,200 were paid.
December 31, the books were closed