The Following Transactions Relate to the City of Middleton, Which

question 8

Essay

The following transactions relate to the City of Middleton, which has a fiscal year end of December 31. The city adopts budgets for the General Fund and the debt service fund. NOTE: for simplicity, and contrary to GASB standards, assume straight-line amortization for this problem.
1. The City of Middleton sells a $2,000,000, 3%, 16-year general obligation bond issue on January 2 at par. The bond pays interest semiannually on July 1 and January 2, with the first principal payment scheduled for next year on January 2. A city hall annex must be constructed with the bond proceeds. The bond premium must be used to pay interest on the debt.
2. Budgets are adjusted to account for the sale of the bond. The debt service fund budget should be adjusted to accommodate the new debt issue. If the debt service fund does not have sufficient resources to pay expenditures, the needed funds will be provided by the General Fund.
3. On February 1, $1,000,000 of the cash from the sale of the bonds is invested for one year at a rate of 1.26%. Earnings on the investment are available for construction of the city hall annex.
4. July 1 the first interest payment is due.
5. December 31 adjusting entries are prepared.
Required:
For the five related transactions provided, prepare all necessary journal entries for the affected funds and at the governmental activities level. Clearly indicate the fund journal or the government-wide journal in which the entry is being recorded. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Definitions:

Water Restrictions

Measures implemented to limit the use of water resources typically in response to drought or water scarcity.

Underground Aquifers

Natural underground reservoirs that store water, sourced from rain or melting snow that seeps through soil and rocks.

Excessive Rainfall

An unusually high amount of precipitation over a period of time, potentially leading to flooding and other water-related issues.

Ocean Fishing Areas

Regions in the ocean designated for fishing activities, often defined by environmental conditions or regulatory boundaries.