Amarillo is authorized to issue $8,000,000, 3 percent regular serial bonds in 2023 for the construction a new exit off the interstate highway within city limits. The bonds mature in equal annual amounts beginning on January 1, 2024for 10 years and pay interest on January 1 and July 1. The city is required to use all accrued interest and premiums to service the debt. The funds to pay the interest will be transferred from the General Fund. The countys fiscal year end is December.

Prepare the journal entries needed to record the first interest payment made on July 1, including the entries required in the debt service fund and any entries required in the governmental activities general ledger at the government-wide level. Assume that the straight-line method is used for premium amortization.

1. Prepare the budgetary entries for 2023 assuming that the bonds were scheduled to be issued on January 2. Assume that the January 1, 2024, principal and interest payments will be included in the 2023 budget. Prepare the entry required to reflect the transfer of funds from the General Fund to the debt service fund. (You may ignore the entry in the General Fund.) (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) Answer is complete but not entirely correct. General Journal Debit Credit Transaction Fund 1. Record the budget transaction. 1 Debt Service Fund 120,000 X Estimated Other Financing SourcesTransfers In Appropriations 120,000 2. Record the transfer of funds. 2 Debt Service Fund Cash 120,000 X Other Financing SourcesInterfund Transfers In 120.000 X