Journal entries for Capital Projects Fund and Debt Service Fund McGaha Village operates a sanitation department as part of its general government activities. McGaha Village will acquire new sanitation trucks that will be financed through the issuance of general obligation bonds. McGaha Village uses a Capital Projects Fund and a Debt Service Fund to account for the transactions. Make journal entries to record the following transactions and events and indicate the appropriate fund in which the transactions are recorded. 1. April 1. McGaha Village issues bonds for their face amount of $300,000.
2. April 1. McGaha Village acquires sanitation trucks at a total cost of $300,000 for cash. The trucks have an estimated useful life of 10 years.
3. October 1. McGaha Village records the fund liability and pays the first installment of principal ($15,000) and interest ($7,500) on the long-term debt.
Answers:
Transaction 1 is recorded in Capital Projects Fund
| Description | Debit | Credit |
| Cash | 300,000 | |
| Other financing sources-long-term debt issued | 300,000 | |
| (To record issuance of debt) |
Transaction 2 is recorded in Capital Projects Fund
| Description | Debit | Credit |
| Expenditures-capital Outlay | 300,000 | |
| Cash | 300,000 | |
| (To record acqusitiion of equipment) |
Transaction 3 is recorded in Debt Service Fund
| Description | Debit | Credit |
| Expenditures-bond principal | 15,000 | 0 |
| Expenditures-bond interest | 7500 | 0 |
| Matured bond principal payable | 0 | 15,000 |
| Matured bond interst Payable | 0 | 7,500 |
| (To record fund liability) | ||
| Matured bond principal payable | 15,000 | 0 |
| matured bond interest payable | 7,500 | 0 |
| Cash | 0 | 22,500 |
| (To Recors payment of liability) |
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