Final answer:
The city of Columbus would record the receipt of bond proceeds in the Capital Projects Fund through a debit to cash and a credit to other financing sources. The Debt Service Fund is not used when initially issuing the bonds but will be involved later for the repayment of the debt.
Step-by-step explanation:
When the city of Columbus issues bonds at par for the construction of a new city office building, the proceeds from the bonds are typically recorded in the Capital Projects Fund. The Capital Projects Fund is used to account for financial resources that are designated for the acquisition or construction of major capital facilities other than those financed by proprietary funds and trust funds. In this scenario, the journal entry to recognize the receipt of the bond proceeds would debit cash and credit other financing sources (bonds payable) in the Capital Projects Fund.
On the other hand, the Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. However, when the bonds are initially issued, there is typically no immediate entry made in the Debt Service Fund. Entries in the Debt Service Fund occur later when the city begins to accumulate resources to pay back the bonds and when actual debt service payments are made.