Description
Your city has decided to build a new library. The projected cost is $2 million. A bond issue for $1.2 million has been authorized, and the remainder is supposed to come from a contribution of $800,000 from the general fund. The bonds sold for $1.3 million, a premium of $100,000. Create the required journal entries for the following transactions:
- The budget for the library
- The payment and receipt of funds from the general fund
- The issuance of the bonds
- Assume that the premium remained in the capital projects fund.
- Identify all of the funds required for these entries.
- Discuss how the bond premium could be disposed.
In general terms, compare and contrast how expenditures are controlled in the general fund and in debt service funds. Explain why differences would occur.
Explanation & Answer
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GOVERNMENTAL ACCOUNTING
1
Student’s Name
Institutional Affiliations
Course Name
Date
GOVERNMENTAL ACCOUNTING
2
Journal entries foe the budget of the library
Dr
Due from general fund
Cr
800,000
Transfer from general fund
Transfer to enterprise fund
800,000
800,000
Cash
800,000
Cash
1,300,000
Bonds payable
1,200,000
Premium on bonds payable
100,000
(To record the total budget for the library construction)
Journal entries for payment and receipt of funds from general fund
Receipt from general fund
Due from general fund
Dr
Cr
800,000
Transfer from general fund
800,000
To record a transfer that is ordered (Other fund)
Payment
Dr
Transfer to enterprise fund
800,000
Cash
(To rec...