Problem 2a: Identify which of the following governmental funds should be used and write the journal entries needed for the listed transactions. You do not need to write any General fund entries for this problem.

Capital projects fund

Debt service fund

Special revenue fund

Permanent fund

Problem 2b: For the Governmental Activities section of the government-wide records: Write any necessary journal entries for the following listed transactions. Write no entry if no entry is needed.

1. Dunellen City, covered in this problem, issues a $11,000,000 bond at face value. The cash is to be used for the construction of a fire station.

2. Previously undesignated cash of $100,000 from the General Fund is set aside to begin paying the bonds issued in item (1).

3. A state cash grant of $325,000 is received that must be spent in the future for updates to parks facilities. The grant proceeds are held until the updating work is started.

4. Cash of $200,000 is transferred from the General Fund for construction of the fire station.

5. Investments valued at $600,000 are received as a donation from a grateful citizen. Income from the investments is to be used for children's programs.

6. Salaries of $75,000 are paid to workers updating the facilities in Main Street Park according to the requirements of the grant received in item 3.

7. The fire station is completed and a check is sent to the primary contractor for $10,200,000. No commitment had previously been recorded for the contract.

8. Nothing has yet been recorded this year regarding scheduled payments on the general obligation bonds. A cash payment of $50,000 is made that consists of $45,000 of interest and $5,000 of principal. The interest had not been previously accrued.