Analyze each of the following transactions and events. (1) Indicate all of the effects of each transaction on each of the funds and the nonfund accounts of a local government. Be sure to indicate the fund(s) affected. Include analysis of any year-end adjustments that are required. Assume that December 31 is the end of the fiscal year. (2) Indicate how each of the transactions, events, or related adjustments should be reported in the operating statement of each fund affected by each transaction.
1. The government issued $4,000,000 of 6%, 10-year bonds at 100 on July 15, 20X3. Interest is payable semiannually on January 15 and July 15 of each year. The bonds were issued to finance construction of a major addition to the government’s primary office building.
2. The government was billed $2,800,000 during the year by the courthouse addition contractor for work performed on the courthouse during the year. The government paid $2,200,000 to the contractor.
3. On July 29, 20X3, the government paid $120,000 from the General Fund to the fund from which the courthouse bonds principal and interest are to be repaid.
4. The government repaid a 5-year, $300,000 note payable and interest on August 15, 20X3. The note was repaid directly from the General Fund. The payment included $15,000 of interest.
5. The government issued $14,000,000 of 6%, 10-year bonds at 100 on September 30, 20X3.
Interest is payable semiannually on March 31 and September 30 of each year. The bonds were issued to finance construction of a major addition to the government’s water plant. The water and sewer department is one of the government’s business-type operations, not a general government operation.