The City of Jefferson engaged in the following transactions in its fiscal year ending August...
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The City of Jefferson engaged in the following transactions in its fiscal year ending August 31, 2020. By law, the county is required to establish a capital projects fund to account for school construction projects and a debt service fund to account for resources legally restricted to the payment of long-term principal and related interest. Record the transactions below noting the appropriate fund. If a transaction impacts two funds, it should be recorded in both.
Question 1) On March 1, 2020, it issued $40 million in general obligation bonds to finance the construction of a new high school. The bonds were sold for $40,500,000 (a premium of $500,000). After issuance, the premium plus an additional $300,000 was transferred to the Debt Service Fund to be held for eventual payment of interest. On August 31, 2020, the city made its first interest payment on the bonds of $800,000.
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