Question
James Page, finance director for the city of Bridgeport, has asked you to help him account for bond proceeds from two bond issuancesone which was
James Page, finance director for the city of Bridgeport, has asked you to help him account for bond proceeds from two bond issuancesone which was issued at a premium and another which was issued at a discount. Prepare journal entries to record the following transactions in the city of Bridgeports Capital Projects Fund during its 2019 fiscal year. 1. Bridgeport issues $18 million face value of general obligation bonds to build a new outdoor music arenaHarbor Arena. The City received an extra $1.5 million as a bond premium. 2. The bond covenant states that bond premiums must be transferred to a Debt Service Fund. The transfer of cash to the Debt Service Fund is made. 3. Bridgeport issues a $15 million face value of general obligation bond to construct a new road. Unfortunately, interest rates increased prior to the issuance of the bonds, and this resulted in the city receiving only $14.6 million from the bonds.
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