Question

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 and 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 $6,890,000. 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. Required Make all necessary entries in the capital projects fund general journal and the governmental activities general journal at the government-wide level.

Answer 1

FULBRIGHT COUNTY

Debits Credits

1.  .Capital Projects Fund:

CASH 6,000,000

   OTHER FINANCING SOURCES PROCEEDS OF BONDS 6,000,000

Governmental Activities:

CASH 6,080,000

BONDS PAYABLE 6,000,000

PREMIUM ON BONDS PAYABLE 60,000

INTEREST PAYABLE (OR EXPENSES—INTEREST ON BONDS) 20,000

(Note: 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.)

2. Capital Projects Fund:

CASH 650,000

REVENUES 650,000

Governmental Activities:

CASH 650,000

PROGRAM REVENUES—CULTURE &

RECREATION—CAPITAL GRANTS &CONTRIBUTIONS 650,000

3.  Capital Projects Fund:

CASH 250,000

OTHER FINANCING SOURCES

—INTER FUND TRANSFERS IN 250,000

Governmental Activities:

NO ENTRY WHEN TRANSFERS ARE BETWEEN GOVERNMENTAL FUNDS

(Note: There would also be an entry in the special revenue fund.)

4. Capital Projects Fund:

ENCUMBRANCES 6,800,000

ENCUMBRANCES OUTSTANDING 6,800,000

Governmental Activities:

BUDGETARY TRANSACTIONS ARE NOT RECORDED IN THE GOVERNMENTAL ACTIVITIES JOURNAL

5.  Capital Projects Fund:

ENCUMBRANCES OUTSTANDING 6,800,000

ENCUMBRANCES 6,800,000

CONSTRUCTION EXPENDITURES 6,890,000

CASH 6,890,000

Governmental Activities:

CONSTRUCTION WORK IN PROGRESS 6,890,000

CASH   6,890,000

LAND 200,000

BUILDINGS 6,295,000

MACHINERY AND EQUIPMENT 395,000

CONSTRUCTION WORK IN PROGRESS    6,890,000

6.  Capital Projects Fund:

To close nominal accounts:

OTHER FINANCING SOURCES— PROCEEDS OF BONDS 6,000,000

OTHER FINANCING SOURCES—

INTER FUND TRANSFERS IN   250,000

REVENUES 650,000

CONSTRUCTION EXPENDITURES 6,890,000

FUND BALANCE—RESTRICTED 10,000

To close the fund:

INTER FUND TRANSFERS OUT 10,000

CASH 10,000

FUND BALANCE—RESTRICTED 10,000

INTER FUND TRANSFERS OUT 10,000

(Note: There would also be an entry in the debt service fund.)

Governmental Activities:

NO ENTRY SINCE THE CLOSING ONLY RELATES TO THE FUND.