Reference no: EM132436528

Question -

1. Borrowed money by issuing a 20-year bond for $3 million, its face value. This money is to be used to construct a highway around the city.

2. Transferred cash of $100,000 from the general fund to the debt service funds to make the first payment of principal and interest on the bond in (1).

3. Paid the cash in (2) on the bond. Of this total, $70,000 represents interest; the remainder reduces the principal of the bond payable.

4. Completed construction of the highway and paid the entire $3 million.

5. The highway (in 4) is expected to last 30 years. However, the government qualifies to use the modified approach, which it has adopted for this system. A $350,000 cost is incurred during the year to maintain the highway at an appropriate, predetermined condition. Of this amount, $290,000 was paid immediately, but the other $60,000 will not be paid until the sixth month of the subsequent year.

6. Received lights for the new highway donated from a local business. The lights are valued at $200,000 and should last 20 years. The modified approach is not used for this network of infrastructure. Straight-line depreciation is applied using the half-year convention.

7. Agreed to stop collecting property taxes from the Acme Company for eight years in exchange for the promise that a small manufacturing plant will be built within the city to generate capital investment and new job opportunities for the residents.

8. Recorded cash revenues of $2 million from the local subway system and made salary expense payments of $300,000 to its employees.

9. Opened a solid waste landfill at the beginning of the year that will be used for 20 years. This year an estimated 4 percent of the capacity was filled. The city anticipates closure, and post closure requirements will be $2 million based on current cost figures although no costs have been incurred to date.

How to record journal entries for government wide and fund based.