Reference no: EM133809

Question :

The City of Baconsville engaged in the subsequent transactions. Consider that the city maintains its books and records in a manner that facilitates the preparation of fund financial statements. Purpose the suitable journal entries in the general fund. If suitable, write "No entry required."

a) The city purchased for cash three dump trucks for $80,000 each.

b) The city sold for $4,000 a police car that had been purchased four years ago at a cost of $30,000. At the time of acquisition, the city evaluated that the police car had a useful life of five years and a salvage value of $5,000.

c) In this year, the city spent $12 million to build a third lane on both sides of the main north-south highway through town.

d) The city traded in a pickup truck used in general government operations for a new pickup truck, paying a difference of $18,000. The old pickup truck was bought four years ago at a cost of $21,000. At the time it had an estimated useful life of five years and an evaluated salvage value of $6,000. At the time of the trade the old truck had a fair value of $10,000. The new truck has a sticker price of $29,000.

e) During the year the city started construction of a new city hall. By year-end, the city had made progress payments to the contractor of $3 million.

f) The city received a gift of land from a citizen. The land is to be used to construct a city park. The land had been in the donor's family since it was homesteaded. It had a fair value when contributed of $2 million.

During the fiscal year ended 6/30/15, the Harriscity engaged in the subsequent transactions.

REQUIRED: Consider that the city maintains its books and records in a manner that facilitates the preparation of its governmental fund financial statements. Prepare all essential journal entries that the city should make for each transaction. Clearly show in which fund the entry is being made. If no entry is needed, write "No entry required."

a) In July 2014, the city issued $30 million in 6 percent 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 2014, the city transferred $1.5 million from the general fund to cover the $0.9 million principal and $0.6 million interest payments due that month on debt issued in last year.

c) In September 2014, the city paid the principal and interest due from (b).

d) In June 2015, 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 2015 on the bonds issued in (a).