Question

Prepare journal entries for capital projects fund and the government-wide governmental activities general Journal for each of the following unrelated transactions. (The General Fund should not be used) (if no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) Transaction Fund Governmental Activies General Journal Debit Creat 1. A town secures a note payable in the amount of $150,000 to pay initial expenses for construction of a new police station. Town administrators plan to repay this note within three months with tax revenues and issue a construction bond shortly thereafter. 1 Capital Projects Fund Governmental Activities 2. A county secures a bond anticipation note in the amount of $500,000 to pay initial expenses for construction of a convention center. The board of county commissioners recommended that the finance department refinance the bond anticipation note by issuing a construction bond when construction activity begins. 2 Capital Projects Fund Governmental Activities 3. Due to an unexpected change in interest rates, a village issued a $2.500.000 bond at 98 percent of par value. The bond was issued to fund construction of a bike path, including restrooms and picnic shelters. It is expected that the shortage will be covered by a future transfer from another fund. 3 Capital Projects Fund Governmental Activities

Answer 1

Town Trans. 1 Fund Capital Projects Fund General Journal Cash Notes Payable Debit in $ Credit in $ 150000 150000 150000 Governmental Activities Cash Notes Payable 150000 2 Capital Projects Fund 500000 Cash Other Financing Sources-Proceeds of Bonds Anticipation Notes 500000 500000 Governmental Activities Cash Bond Anticipation Notes Payable 500000 3 Capital Projects Fund 2450000 Cash Other Financing Uses-Discount on Bonds Other Financing Sources-Proceeds of Bonds 50000 2500000 Governmental Activities Cash Discount on Bonds Payable Bonds Payable 2450000 50000 2500000 4 Capital Projects Fund 5000000 Cash Other Financing Sources-Proceeds of Bonds 5000000 5050000 Governmental Activities Cash Bonds Payable Premium on Bonds Payable 5000000 50000 5 Capital Projects Fund 4000000 Cash Other Financing Sources-Proceeds of Bonds 4000000 4040000 4000000 Cash Bonds Payable Accured Interest Payable (or Expenses-Interest on Bonds) Accured Interest Payable (or Expenses-Interest on Bonds) = 4000000 x 6% x 2/12 = 40000 40000