July 1, 2016 the City of Derby issued $10,000,000, 5 percent term bonds at 100 to construct a new city office building. The fiscal year for the city ends on December 31. The bonds mature in five years on July 1, 2021. Interest on the bonds is payable semiannually on January 1 and July 1. A sinking fund is to be established with annual additions made on December 31, with the first addition to be made on December 31, 2016. Cash for the sinking fund additions and the semiannual interest payments will be transferred from the General Fund shortly before the due dates. City officials assume a yield on sinking fund investments of 7 percent per annum. Please provide journal entries for the following selected transactions.

1. Please provide the journal entry for the bond issue

Debt Service Fund:

Governmental Activities (Govt-wide):

1. Please complete the following (partial) schedule related to the sinking fund investments for the first three (3) payments into sinking fund.

Investment Date	Beginning of Year	Interest Earnings	Sinking Fund Additions	Total Additions/ Increase	Ending Balance

NOTE: The following journal entries are for fiscal year 2018 and after.

1. Please provide the journal entry to record the budget at the beginning of fiscal year 2018.

Debt Service Fund:

Governmental Activities (Govt-wide):

1. On December 29, 2018, the debt service fund received cash from the general fund to make the sinking fund investment on December 31st and the next interest payment.

Debt Service Fund:

Governmental Activities (Govt-wide):