Option #2: Debt Service funds in Accounting

Part A: The Sailfish County authorized issuance of $7,000,000, 3 percent regular serial bonds in 20X0 for construction of a new library. The bonds mature in equal amounts beginning January 1, 20X1 for 10 years and pay interest on January 1 and July 1. The county is required to use all accrued interest and premiums to service the debt. The funds to pay the interest will be transferred from the General fund. The county's fiscal year ends on December 31.

Required:

1. The bonds were sold on January 1, 20X0 at 101. Prepare journal entries needed to record issuance of the bonds, including the entries in the debt service fund and any entries required in the governmental activities general ledger at the government-wide level.

2. Prepare the budgetary entry for 20X0 for the debt service fund to record the estimated interest payments to be paid on July 1.

3. Prepare the journal entry for the debt service fund to reflect the transfer of funds from the General Fund to the debt service fund in anticipation of the interest payment due on July 1.

4. Prepare the journal entries needed to record the interest payment made on July 1, including entries required in the debt service fund and any entries required in the governmental activities general ledger at the government-wide level. Assume straight line amortization is used for the premium.

Submit your responses to the questions in an Excel spreadsheet Label each question clearly.

Include computations in a table and show work.