Both the reported value of longt-term and periodic interest charges should be based on unamortized issue price (plus or minus unamortized premium discount) and initial yield.

The city of fairfield issued $100 million of 20-year,6% coupon bonds (3% per semiannual period) for $89.322 million. The price reflected a yield of 7% (3.5% per semiannual period).

1. Prepare entries to reflect how to report the following in the city's government-wide statements:

a. The issuance of the bond

b. The first semiannual payment of interest

c. The second semiannual payment of interest

2. Prepare entries to account for the same transactions in an appropriate government fund.