Question

 

The problem is for recording capital projects fund transactions.

The county issued 6000000, 4% bonds, with interest payable semi-annually on june 30 and december 31. The ponds sold for 101 on july 30, 2016. proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue

Answer 1

Date	Particulars	Debit$	Credit$
01/01/2015	Bank a/c	6,000,000
	To 4% Bond		6,000,000
	Being Cash received From bond issue
30/06/2015	Interest a/c	120,000
	To Bank		120,000
	=6000000*4/100*6/12
	Being cash paid towards interest on bond
31/12/2015	Interest a/c	120,000
	To Bank		120,000
	=6000000*4/100*6/12
	Being cash paid towards interest on bond
30/06/2015	Interest a/c	120,000
	To Bank		120,000
	=6000000*4/100*6/12
	Being cash paid towards interest on bond
30/07/2016	4% bond a/c	6060000
	Interest a/c	20000
	To Bank		6080000
	interest'=6000000*4/100*1/12
	Sales=60000*101
	Being cash paid towards interest on bond as well as sale of bond
	Library should be capitalised once it completed.
	The enthy for capitalisation is
	Library a/c
	To bank