Your city has decided to build a new library. The projected cost is $2 million. A bond issue for $1.2 million has been authorized, and the remainder is supposed to come from a contribution of $800,000 from the general fund. The bonds sold for $1.3 million, a premium of $100,000. Create the required journal entries for the following transactions:
•The budget for the library
•The payment and receipt of funds from the general fund
•The issuance of the bonds ◦Assume that the premium remained in the capital projects fund.
◦Identify all of the funds required for these entries.
◦Discuss how the bond premium could be disposed.