Bus System is accounted for in an enterprise fund. Delight City Bus System had the following transactions for 2015. 1. Delight City Bus System issued $10,000,000 is 8 percent revenue bonds.

Bus System is accounted for in an enterprise fund. Delight City Bus System had the following transactions for 2015.

1. Delight City Bus System issued $10,000,000 is 8 percent revenue bonds. The bonds were issued at par.
   1. Delight City Bus System used the proceeds from the bond issue to acquire new buses.
   1. Delight City Bus System accrued nine month’s interest ($600,000) at year end.
   1. Delight City Bus System incurred $50,000 of repair costs paying for them with cash.

Required:

a.  Prepare appropriate journal entries.

b.  Which financial statements would be required for Delight City Bus System for the year end June 30, 2015? State the titles and show the general format of the classifications that would be reported in each of the required financial statement.

Part A answer

1. Cash                                                          10,000,000

Bonds Payable                                                                        10,000,000

                Bonds issued at Par and acquirement of new buses

• Interest Expense                                             600,000

Accrued Interest Payable                                                   600,000

            Accrued nine months’ interest

• Repair Expense                                               50,000

Restricted Assets                                                                  

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