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PROBLEM 3 Prepare entries to record the following transactions related to acquisition of capital assets by a county. The county does not use encumbrance accounting.
PROBLEM 3
Prepare entries to record the following transactions related to acquisition of capital assets by a county. The county does not use encumbrance accounting. Identify the fund(s) used. Record journal entries for all funds, and label the fund name for each journal entry.
- The county issues general obligation bonds in the amount of $1,000,000 receiving cash for the full-face amount of the bonds. The cash will be used to buy capital assets.
- The county buys a prefabricated building for $475,000, using part of the bond proceeds. The building is delivered and the invoice for the building is approved.
- The invoice approved in b. is paid.
- The General Fund transfers cash of $150,000 to another fund in anticipation of the payment of the first installment of interest ($50,000) and principal ($100,000) on the debt.
- The first installment of debt service on bonds issued in a. becomes due and payable.
- Debt service on the bonds issued in 1. is paid.
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