The City of Faireld issued $100 million of 20 year, 6 percent coupon bonds (3 percent per semiannual period) for $89 32 million The price reected a yield of 7 percent (3 5 percent period semiannual period) 1 Prepare entries to reect how the following would be reported in the citys government wide s...

1 Governmentwide statements Cash 89322 Bond discount 10678 Bonds payable ...

The City of Faireld issued $100 million of 20-year, 6 percent coupon bonds (3 percent per semiannual

Question:

The City of Fairﬁeld issued $100 million of 20-year, 6 percent bonds (3 percent per semiannual period) for $89.32 million. The price reﬂected a yield of 7 percent (3.5 percent period semiannual period).
1. Prepare entries to reﬂect how the following would be reported 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 governmental fund.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...