Q&A Hero

Question

The City of Attross entered the following transactions during 2011:

1. The city authorized a bond issue of $2,500,000 par to finance construction of a fountain and pavilion in the city square. The bonds were issued for $2,560,000. The premium was transferred to the fund for which the debt will be serviced. (This was a nonreciprocal transfer.)

2. The city entered into a contract for construction of the fountain at an estimated cost of $2,425,000.

3. The city received and paid a bill for $2,445,000 from the contractor upon completion of and approval of the fountain.

4. The unused bond proceeds were set aside for debt service on the bonds. Accordingly, those resources were paid to the appropriate fund(nonreciprocal).

Required:

Prepare journal entries for each of the above transactions. Identify the appropriate fund or funds used by Attross.