Problem
REQUIRED: Assume that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Prepare journal entries to record the following transactions. Indicate in which fund the entry should be made.
1. On July 1 the city issued $12 million of 5% serial bonds at face to fund construction of the new office building. The bonds pay interest on January 1 and July 1. The first principal payments are due five years hence.
2. On July 15 the city signed a $18 million contract with a local construction company for construction of the buildings.
3. On September 1 a local benefactor donated $6 million cash for the office building.
4. On October 1, the contractor requested a progress payment of $3 million for the earthwork and foundation work on the new building. The city paid the contractor.
5. On January 1, the city transferred from the general fund the amount necessary to make the first interest payment. The city made the first interest payment on the bonds.
6. On June 1 the contractor requested and received a progress payment of $12 million.