During 2010, the City of Lebo started a street paving project. The project is being financed by...
Question:
During 2010, the City of Lebo started a street paving project. The project is being financed by the proceeds from the issue of five-year, 6% special assessment bonds payable at a face value of $3,000,000. The bonds were issued July 1, 2010, at their par value. One-fifth of the principal plus interest is payable on June 30 of each year beginning June 30, 2011. Property owners are assessed to provide the funds to pay the principal and interest on the debt. The following transactions occurred during 2010 and 2011: The bonds for the paving of the streets were issued. The street paving was completed at a cost of $3,000,000. Property owners were assessed and billed for the first installment of principal and interest on the special assessment debt. Assessments for the first installment of principal and interest on the special assessment debt were collected. The June 30, 2011, payment of principal and interest was made.
Instructions
Prepare all journal entries for the preceding transactions that are necessary for the City of Lebo assuming: The City of Lebo has not obligated itself in any manner to the holders of the special assessment bonds. The City of Lebo has made a commitment to the holders of the special assessment bonds to assure the full payment of principal and interest on the due dates.
Journal Entry:
A journal entry is used to record financial information concerning the business transactions. When recording journal entries, a minimum of two accounts must be affected where one is recorded on the debit side while the other is recorded on the credit side.
Answer and Explanation: 1
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| No. | Account title | Debit $ | Credit $ |
|---|---|---|---|
| 1 | Cash | $3,000,000 | |
| To Contribution from... |
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Journal Entries and Trial Balance in Accounting
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Chapter 3 / Lesson 10
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Discover the meaning of a journal entry and a trial balance, types of journal entries, how a general ledger differs from a trial balance, and some examples.
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