On July 1, 2019, the first day of its 2020 fiscal year, the Town of Bear Creek issued at par $2,000,000 of 6 percent term bonds to renovate a historic wing of its main administrative building. The bonds mature in five years on July 1, 2024. Interest is payable semiannually on January 1 and July 1. As illustrated in the table below, a sinking fund is to be established with equal semiannual additions made on June 30 and December 31. Cash for the sinking fund additions and the semiannual interest payments will be transferred from the General Fund shortly before the due dates. Investment earnings are added to the investment principal.

Required
Create a term bond debt service fund for the town and prepare journal entries in the debt service fund for the following:
a. On July 1, 2019, record the budget for the fiscal year ended June 30, 2020. Include all inter fund transfers to be received from the General Fund during the year. An appropriation should be provided only for the interest payment due on January 1, 2020.
b. On December 28, 2019, the General Fund transferred $234,461 to the debt service fund. The addition to the sinking fund was immediately invested in 6 percent certificates of deposit.

c. On December 28, 2019, the city issued checks to bondholders for the interest payment due on January 1, 2020.
d. On June 27, 2020, the General Fund transferred $234,461 to the debt service fund. The addition for the sinking fund was invested immediately in 6 percent certificates of deposit.
e. Actual interest earned on sinking fund investments at year-end (June 30, 2020) was the same as the amount budgeted in the table. This interest adds to the sinking fund balance.
f. All appropriate closing entries were made at June 30, 2020, for the debt service fund.

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Flscal Required Expected Earnings Ending Year Period Addition Balance $ 174,461 2020 $174,461 2 174,461 5,234 354,156 2021 3 174,461 10,625 539,242 729,880 4 174,461 16,177 2022 174,461 21,896 926,237 174,461 27,787 1,128,485 2023 174,461 33,855 1,336,801 174,461 40,104 1,551,366 2024 174,461 46,541 1,772,368 174,461 53,171 2,000,000