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Question

1. Urban City issued $6 million of general obligation bonds at par to finance the construction of a city building. The bonds are 6%, 10-year bonds, and interest is paid on June 30 and December 31.

2. The city transferred $3,600,000 from its General Fund to its Debt Service Fund to provide a portion of the resources needed to service the bonds.

3. The city paid the first interest payment to the bondholders.

Required:

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