New City’s incorporation was just approved by a vote of the citizenry at the November 2017 election. New City will start operations beginning January 1, 2018. The services it plans to provide include a mayor’s office, a town clerk’s office (for tax assessment and collection), police services, disposal of rubbish, water and sewer services, street maintenance, parks, and recreation facilities. Ignoring budgetary entries, provide the fund and any journal entries that would need to be made to get New City started:

1. On January 1, New City receives a “start-up” grant from Kelly County of $1.5 million cash. All grant eligibility requirements are met.

2. On January 10, New City’s governing body buys a building for $450,000 to use as its City Hall.

3. New City issues $50 million in revenue bonds to buy Kelly County #2 water and sewer treatment plant, located within New City limits. The bonds were sold at face value (no premium or discount). New City pays $50 million for the water and sewer treatment plant.

4. On January 15, New City pays salaries: (a) $17,000 to employees of the water and sewer plant and (b) $15,000 to mayor’s office and town clerk’s office employees.

Note: Under the Fund column, select the appropriate fund in which the transaction is recorded (EF: Enterprise Fund or GF: General Fund).

Ref	Fund	Description	Debit	Credit
1	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
2	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
3	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		To record issuance of revenue bonds.
	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		To record purchase of water and sewer plant.
4	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		To record payment of water and sewer plant salaries.
	AnswerGFEF	AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		AnswerCapital Assets - Water and Sewer PlantCashExpenditure—capital outlayExpenditures—salariesGrantrevenueRevenue Bonds PayableSalaries expense	Answer	Answer
		To record payment of mayor's and town clerk's offices salaries.