1. Assume that a city issues a $1,200,000 bond at par. The city, subsequently, pays $72,000 in interest on the bond and $1,200,000 of the principal.

Required: Prepare the journal entries to record the issuance of the bond and the subsequent payments.

2. Assume that a town leases equipment on a capital lease. The present value of the leased equipment is $65,000. The city, subsequently, pays $6,500 on the lease, $3,900 of which is designated as interest and the remainder to a reduction of the lease obligation:

Required: Prepare the journal entry to record the acquisition of equipment via lease and the subsequent payment.

3. Assume that a town purchases $11,000 of supplies on account toward the end of the year. A year-end audit reveals that $3,000 of the inventories remain unused.

Required: Prepare the journal entry for the purchase of the inventories and the year-end adjusting entry, assuming that the purchases method is used.

4. Assume that a town purchases $11,000 of supplies on account toward the end of the year. A year-end audit reveals that $3,000 of the inventories remain unused.

Required: Prepare the journal entry for the purchase of the inventories and the year-end adjusting entry assuming that the consumption method is used