Question

On April 1, 2020, the premium and accrued interest on bonds sold were received by the Street Improvement Bond Debt Service Fund. (See Transaction 5-a-7 in the Street Improvement Fund.)Required: Record this transaction in the debt service fund. No entry is required at this time in the governmental activities general journal since the bond issue, including the related premium and accrued interest, was recorded in the governmental activities general journal in transaction 5-a-7.

Answer 1

Cash Dr. $713,750

Bond Interest Cr. $213,750

Bond Premium Cr. $500,000

Step-by-step explanation:

The journal entries are used to record a transaction that occurs in the business operations. It helps to keep a track of the expenses and revenues. The selling of bond premium and bond accrued interest is recorded with a debit and credit entry. The debit the amount of cash received after the sell of bond debt service fund.