Question

Prepare journal entries to record the following transactions in the City of Brock’s Capital Projects Fund...

Prepare journal entries to record the following transactions in the City of Brock’s Capital Projects Fund during its 2019 fiscal year.

  1. The City of Brock issues $10 million face value of general obligation bonds to build a new water park. The City received an extra $500,000 million as a bond premium. The bond covenant states that bond premiums must be used for debt service. (This requires a journal entry for the bond issuance and a second journal entry for the transfer of the bond premium.)
  2. The City of Brock issues $20 million face value of general obligation bonds to construct new sidewalks and to reconfigure streets for pedestrian traffic in its historic downtown. Unfortunately, the City received only $19.8 million from the bond issuance due to a rise in interest rates prior to their issuance.

Homework Answers

Answer #1
Cash 10500000
Other financing sources--Bond payable 10000000
Other financing sources --Bond premium 500000
(To record issue of bonds)
Other financing use--Non-reciprocal transfer to debt service fund 500000
Cash 500000
(To record transfer of bond premium to debt service fund)
Cash 19800000
Discount on issues of bonds 200000
Other financing sources--Bond payable 20000000
(To record issue of bonds at discount)

IN CASE OF ANY CORRECTIONS FEEL FREE TO COMMENT BELOW

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