Journal entries, schedule of long-term debt. The city of Chester was incorporated on January 1, 20X2. On December 31, 20X7, a careful study of the citys records revealed the following information regarding long-term debt:
a. General obligation bonds in the amount of $1,500,000 were authorized and issued at face value on July 1, 20X2, to finance the construction of a school. The 6% bonds pay interest semiannually on January 1 and July 1, and they mature 10 years from the issuance date.
b. Serial bonds of $1,000,000 were sold at 99 on January 1, 20X4, to help finance a new city hall and cultural center. An additional $750,000 was received from an anonymous benefactor.
The 5% serial bonds were to be redeemed in annual amounts of $100,000, beginning on January 1, 20X7. A sinking fund was established on January 2, 20X4, to provide for the retirement of the serial bonds. Deposits of $70,000 were to be made on January 2 of each year, beginning in 20X4. All amounts deposited were invested immediately at a net yield of 8%.
c. Property owners were assessed $750,000, to be paid in five equal annual installments, to finance construction of a storm sewer system and repaving of the affected roadways. To have cash when needed to pay for the construction, $600,000 of 5%, 5-year bonds were issued at face value by the Storm Sewer Proprietary Fund.
d. Term bonds totaling $400,000 were sold at face value on January 1, 20X5, to finance construction.
The 5%, 10-year bonds pay interest semiannually on January 1 and July 1. Each year, starting with January 1, 20X5, $40,000 was to be set aside in a sinking fund to provide for retirement of the bonds at maturity. Any income earned by the sinking fund was to be applied to the semiannual interest payments.
1. Prepare only the journal entries for the transactions that would be recorded in the general long term debt account group through December 31, 20X7.
2. Prepare a schedule of long-term liabilities for the city of Chester as of December 31, 20X7.