Question

Question 4 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

Journal entries
Date	Account Title And Explanation	Debit	Credit
1)	Cash A/c	$10,500,000
	Bond payable A/c		$10,000,000
	Bond premium A;c		$500,000
	( To record issuance of bonds)
2)	Transfer to debt service fund A/c	$500,000
	Cash A/c		$500,000
	( To record transfer of bond premium to debt service fund )
3)	Cash A/c	$19,800,000
	Discount on issue of bonds A/c	$200,000
	Bond payable A/c		$20,000,000
	( To record issue of bond at discount)