During the fiscal year ended 6/30/11, the City of Hartsville engaged in the following transactions:
a) In July 2010, the City issued $30 million in 6% general obligation term bonds to finance construction of a new building to house City offices. The bonds were issued at a premium of $300,000.
b) In September 2010, the City transferred $1.5 million from the General Fund to cover the $.9 million principal and $.6 million interest payments due that month on debt issued in previous years.
c) In September 2010, the City paid the principal and interest due from (b).
d) In June 2011, the City transferred $3 million from the General Fund to cover the $1.8 million interest payment and the $1.2 million principal payment due in July 2011 on the bonds issued in (a).
Assuming the city maintains its books and records in a manner that facilitates the preparation of its governmental fund financial statements, prepare all necessary journal entries that the City should make for each transaction. Clearly indicate in which fund the entry is being made. If no entry is required, write "No Entry Required."
The borrowing or debt taken by the entity to meets its financial needs and holds it for more than 12 months is known as long-term debt. It comes under non-current liability head in the balance sheet. It has lower interest rate in comparison to short-term debt.
Answer and Explanation:
(Amount in million)
|Date||Particulars||Debit ($)||Credit ($)|
|Premium on issue of bonds||0.3|
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from Accounting 101: Financial AccountingChapter 10 / Lesson 7