On June 15, 2014, Malmo City authorizes the issuance of $500,000 par of 6 percent serial bonds to be issued on July 1, 2014, and to mature in annual serials of $100,000 beginning on July 1, 2015. The proceeds of the bond issue are to be used to finance a new tourist rest area.
During the fiscal year ended June 30, 2015, the following events and transactions occurred: July 1-A contract for construction of the rest area is awarded to Gunnarsson Construction Company for $480,000.
July 1-$250,000 par value of 6 percent serial bonds are sold at a premium of 2 percent. December 20-A bill is received from Gunnarsson Construction Company for one-third of the contract price.
January 1-Gunnarsson Construction Company is paid for work completed to date, less a 10 percent retained percentage to ensure performance.
January 1-Bond interest due is paid with funds transferred from the general fund and from the premium that was made available for interest payments.
June 30-A bill is received from Gunnarsson Construction Company for one-third of the contract price.
REQUIRED
1. Prepare journal entries in each of the affected funds to account for the transactions and events described. Identify the fund for each journal entry.
2. Prepare a closing journal entry for the capital projects fund at June 30, 2015.