(Journal entries regarding a bond issue and accounting for a premium)

The City of Lands-A-Lot authorized a bond issue for a parking garage. The estimated cost was $\$ 4$ million. The garage would be financed through a $\$ 3$ million bond issue and a $\$ 1$ million contribution from the General Fund. The General Fund made its contribution and the bonds were sold for $\$ 3,200,000$.

Required: 1. Prepare journal entries to record the budget for the parking garage, the payment and receipt of the General Fund's

contribution, and the issuance of the bonds, assuming the premium remained in the Capital Projects Fund. Identify the fund(s) used to record the transactions.
2. Discuss alternate methods of dealing with the bond premium.