1. Central Valley received voter approval to issue $12 million of 5% bonds to construct a city office building. The estimated total cost of construction is $18 million. The city hopes to raise the balance needed through private donations. The city has a June 30 fiscal year-end. If the city maintains its books and records for fund financial accounting, prepare the appropriate journal entries. Be sure to indicate in which fund the entry is being made.

1. July 1, the city issued $12 million of 5% serial bonds at face value. The bonds pay interest on January 1 and July 1 and the first principal payments are due in five years.

2. July 15, the city signed a $18 million contract with a local construction company for construction of the buildings.

3. September 1, a local benefactor donated $6 million cash for the office building.