Government and Not for Profit accounting

timer Asked: Jul 30th, 2014

Question description

The accounting for bond premiums is not the mirror image of that for bond discounts.

Pacific Independent School District issued $100 million of general obligation bonds to finance the construction of new schools. The bonds were issued at a premium of 600000.

1.  Prepare the capital projects funds journal entries to record the issue of the bonds and transfer of the premium to an appropriate fund.

2.  Suppose, instead, that the bonds are issued at a discount of $600,000 but that the project still cost $$100 million. Prepare the appropriate entries.

a.  Contrast the entries in this part and in part 1.

b.  Indicate the options available to the school district and tell how they affect the entries required of the district.

c.  Suppose the government chose to finance the balance of the project with general revenues. Prepare the appropriate capital projects fund entry. 

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