Business, 02.03.2021 01:50 Brandonjr12

On July 1, a city issued, at par, $100 million in 6 percent, 20-year general obligation bonds. It established a debt service fund to account for the resources to pay interest and principal. In the year that it issued the debt, prepare journal entries for the debt service fund (please ignore other funds for brevity in this part of the homework) as the city engaged in the following: 1. It estimated that it would make interest payments of $3 million and have interest earnings of $30,000 from investments. It would transfer from the general fund to the debt service fund $2.97 million to pay interest and $500,000 to provide for the payment of principal when the bonds mature. Further, as required by the bond indentures, it would transfer $1 million of the bond proceeds from the capital project fund to the debt service fund to be held in reserve until the debt matures.

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On July 1, a city issued, at par, $100 million in 6 percent, 20-year general obligation bonds. It es...