Gotham City issued $500,000 of 8% regular serial bonds at par (no accrued interest) on January 2,

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Question:

Gotham City issued $500,000 of 8% regular serial bonds at par (no accrued interest) on January 2, 20X0, to finance a capital improvement project(General Ledger Entries) . Interest is payable semiannually on January 2 and July 2, and $50,000 of the principal matures each January 2 beginning in 20X1 and ending in 20Y0. Resources for servicing the debt will be made available through a special tax levy for this purpose and transfers as needed from a Special Revenue Fund. The required transfers typically will be made on January 1 and July 1, respectively. The DSF is not under formal budget control; the city’s fiscal year begins October 1.

Prepare general journal entries to record the following transactions and events in the General Ledger of the DSF.

Transactions in the years ending September 30, 20X0 and September 30, 20X1:

June 28, 20X0: The first installment of the special tax was received, $52,000.

June 29, 20X0: A Special Revenue Fund transfer of $38,000 was received.

July 2, 20X0: The semiannual interest payment on the bonds was made.

July 3, 20X0: The remaining cash ($70,000) was invested.

December 30, 20X0: The investments matured, and $73,000 cash was received.

January 2, 20X1: The semiannual interest payment and the bond payment were made.

Transactions in the year ending September 30,20Y0:

January 2, 20Y0: At the beginning of 20Y0, the DSF had accumulated $30,000 in investments (from transfers) and $25,000 in cash (from taxes). The investments were liquidated at face value, and the final interest and principal payment on the bonds was made.

January 3, 20Y0: The DSF purpose having been served, the council ordered the residual assets transferred to a Special Revenue Fund and the DSF terminated