During 2013, the City of Atlantis Started a Street Paving

Essay

During 2013, the City of Atlantis started a street paving project. The project is being financed by the proceeds from the issue of five-year, 6% special assessment bonds payable at a face value of $3,000,000. The bonds were issued July 1, 2013 at their par value. One-fifth of the principal plus interest is payable on June 30 of each year beginning June 30, 2014. Property owners are assessed to provide the funds to pay the principal and interest on the debt.
The following transactions occurred during 2013 and 2014:
1. The bonds for the paving of the streets were issued.
2. The street paving was completed at a cost of $3,000,000.
3. Property owners were assessed and billed for the first installment of principal and interest on the special assessment debt.
4. Assessments for the first installment of principal and interest on the special assessment debt were collected. The June 30, 2014, payment of principal and interest was made.
Required:
Prepare all journal entries for the preceding transactions that are necessary for the City of Atlantis assuming:
A. The City of Atlantis has not obligated itself in any manner to the holders of the special assessment bonds.
B. The City of Atlantis has made a commitment to the holders of the special assessment bonds to assure the full payment of principal and interest on the due dates.