Question

(You need not provide the journal entry or entries new 5-22. Recording Capital Projects Fund Transactions. (L05-4) In Fulbright County, the Culture and Recreation Department constructed a library in one of the county's high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the current fiscal year. The county operates on a calendar-year basis. 1. The county issued $6,000,000 of 4 percent bonds, with interest payable semiannually on January 1 and July 1. The bonds sold for 101 on February 1. 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. 2. A $650,000 federal grant was received to help finance construction of the library. 3. The Library Special Revenue Fund transferred $250,000 for use in construc- tion of the library. 4. A construction contract was awarded in the amount of $6,800,000. 5. The library was completed four months ahead of schedule. Total construc- tion expenditures for the library amounted to S6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, $6,295,000 to building, and the remainder to equipment. 6. The capital projects fund temporary accounts were closed to Fund Balance- Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment

Answer 1

Fulbright County Journal Enteries Trans. Fund 1 Capital Projects Fund Particulars Cash a/c Dr. To Other Financing Sources-Proceeds of Bonds Debit in $ Credit in $ 6000000 6000000 6080000 Governmental Activities Cash a/c Dr. To Bonds Payable To Premium on Bonds Payable To Interest Payable 6000000 60000 20000 2 Capital Projects Fund Dr. 650000 Cash a/c To Revenues 650000 Governmental Activities Cash a/c Dr. 650000 To Program Revenues-Culture and Recreation-Capital Grants and Contribu 650000 3 Capital Projects Fund Dr. 250000 Cash a/c To Other Financing Sources-Interfund Transfers In 250000 Governmental Activities No Journal Entry Required 4 Capital Projects Fund Dr. 6800000 Encumbrances a/c To Encumbrances Outstanding 6800000 Governmental Activities No Journal Entry Required Capital Projects Fund 6800000 Encumbrances Outstanding a/c Dr. To Encumbrances (Record the completion of construction of the library) 6800000 6890000 Construction Expenditures a/c Dr. To Cash (Record the payment upon completion of capital project) 6890000 5c. 6890000 Governmental Activities Construction Work in Progress a/c Dr. To Cash (Record the completion of construction of the library) 6890000 5d. Dr. Land a/c Buildings a/c Dr. Machinery and Equipment a/c Dr. To Construction Work in Progress (Record the capitalization of each item.) 200000 6295000 395000 6890000 6a. Capital Projects Fund 6000000 250000 650000 Dr. Other Financing Sources-Proceeds of Bonds a/c Dr. Other Financing Sources-Interfund Transfers In a/c Dr. Revenues a/c To Construction Expenditures To Fund Balance-Restricted (Close the temporary accounts to Fund Balance-Restricted.) 6890000 10000 6b. 10000 Interfund Transfers Out a/c Dr. To Cash (Record the transfer to the debt service fund) 10000 6. 10000 Fund Balance-Restricted a/c Dr. To Interfund Transfers Out (Close the remaining temporary account to Fund Balance-Restricted.) 10000 6d. Governmental Activities No Journal Entry Required

Workings: Governmental Activities: 1. This assumes the premium and interest are recorded directly in the debt service fund. If the premium and interest were first recorded in the capital projects fund, the capital projects fund would also credit Due to Debt Service Fund for $80,000 Governmental Activities: 3.No entry when transfers are between governmental funds Governmental Activities: 4.Budgetary transactions are not recorded in the governmental activities journal Capital Projects Fund: 6. There would also be an entry in the debt service fund Governmental Activities: No entry since the closing only relates to the fund