Question

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.

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)

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THANK YOU!