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Item 4

Item 4 2.5 points Item Skipped

On July 1, 2019, the first day of its 2020 fiscal year, the Town of Bear Creek issued at par $5,900,000 of 6 percent term bonds to renovate a historic wing of its main administrative building. The bonds mature in five years on July 1, 2024. Interest is payable semiannually on January 1 and July 1. As illustrated in the table below, a sinking fund is to be established with equal semiannual additions made on June 30 and December 31. Cash for the sinking fund additions and the semiannual interest payments will be transferred from the General Fund shortly before the due dates. Investment earnings are added to the investment principal.

Fiscal Year	Period	Required Addition			Expected Earnings			Ending Balance
2020	1	$	514,660		$	0		$	514,660
	2		514,660			15,440			1,044,760
2021	3		514,660			31,343			1,590,763
	4		514,660			47,723			2,153,145
2022	5		514,660			64,594			2,732,400
	6		514,660			81,972			3,329,032
2023	7		514,660			99,871			3,943,563
	8		514,660			118,307			4,576,530
2024	9		514,660			137,296			5,228,486
	10		514,660			156,855			5,900,000

Required

1. a-1. Prepare journal entries in the debt service fund for the following:

2. -2. Prepare the closing entries.