Capital Projects Fund Entries and Statements
The City of Waterman established a capital projects fund for the construction of an access ramp from the parking garage to the city’s office building to be used by individuals with disabilities. The estimated cost of the ramp is $200,000. On January 1, 20X2, a 10 percent, $150,000 bond issue was sold at 104.0 with the premium transferred to the debt service fund. At that date, the county board provided a $50,000 grant. After a period of negotiation, the city council awarded a construction contract for $182,000 on April 5, 20X2. The ramp was completed on August 8, 20X2; its actual cost was $189,000. The city council approved payment of the total actual cost of $189,000.
In addition to the $189,000, the ramp was carpeted with all-weather material at a cost of $5,500. On November 3, 20X2, the city council gave the final approval to pay for the ramp and the carpeting. After all bills were paid, the remaining fund balance was transferred to the debt service fund.
Required
- Prepare entries for the capital projects fund for 20X2.
- Prepare a statement of revenues, expenditures, and changes in fund balance for the capital projects fund for 20X2.
(a)
Introduction: Interim reporting is made in between the fiscal year. It is made before the completion of fiscal year in mostly public corporation for taking various decisions for the remaining period. Mostly quarterly and half yearly report is prepared.
The journal entries for capital project fund for 20X2.
Explanation of Solution
The journal entries for capital project fund for 20X2 is as follows:
Date | Particulars | Debit ($) | Credit ($) |
January 1, 20X2 | Cash | 50000 | |
To revenue account-Grant | 50000 | ||
(Recording entry for receipt of grant from country board) | |||
January 1, 20X2 | Cash | 156000 | |
To Other financing sources-Bond account | 150000 | ||
To Other financing sources-Bond premium | 6000 | ||
(Recording entry for issuing bonds at premium) | |||
January 1, 20X2 | Other financing sources-Transfer to debt service fund | 6000 | |
To cash | 6000 | ||
(Recording entry for transfer of bond premium to debt service fund) | |||
April 5, 20X2 | Encumbrances-construction contract | 182000 | |
To Budgetary fund balance-Assigned for encumbrances | 182000 | ||
(Recording entry for construction contract awarded) | |||
August 8, 20X2 | Budgetary fund balance-Assigned for encumbrances | 182000 | |
To Encumbrances-construction contract | 182000 | ||
(Recording entry to reverse the effect of construction contract as ramp was completed) | |||
August 8, 20X2 | Expenditure-Capital expense | 189000 | |
To Contract payable | 189000 | ||
(Recording entry for approval of payment of all construction expense) | |||
August 8, 20X2 | Expenditures | 5500 | |
To vouchers payable | 5500 | ||
(Recording entry for expense incurred for carpeting all-weather material to building) | |||
November 3, 20X2 | Contract payable | 189000 | |
Vouchers payable | 5500 | ||
To Cash | 194500 | ||
(Recording entry for payment of expenses related to construction of ramp) | |||
November 3, 20X2 | Revenue account-Grant | 50000 | |
Other financing sources-Bond account | 150000 | ||
Other financing sources-Bond premium | 6000 | ||
To fund balance-unassigned | 206000 | ||
(Recording entry for closing nominal accounts) | |||
November 3, 20X2 | Fund balance-unassigned | 200500 | |
To Expenditures | 194500 | ||
To Other financing sources-Transfer to debt service fund | 6000 | ||
(Recording entry for closing nominal accounts) | |||
November 3, 20X2 | Other financing sources-Transfer to debt service fund | 5500 | |
To cash | 5500 | ||
(Recording entry for transfer of remaining amount to debt service fund) | |||
November 3, 20X2 | Fund balance-unassigned | ||
To Other financing sources-Transfer to debt service fund | |||
(Recording entry to close balance of debt service fund) |
(b)
Introduction: Interim reporting is made in between the fiscal year. It is made before the completion of fiscal year in mostly public corporation for taking various decisions for the remaining period. Mostly quarterly and half yearly report is prepared.
The statement of revenues, expenditures and changes in fund balance for capital projects fund.
Explanation of Solution
The statement of revenues, expenditures and changes in fund balance for capital projects fund is as follows:
Particulars | Amount ($) |
Revenue- Country grant | 50000 |
Expenditure-Capital expense (189000+5500) | -194500 |
Expense over revenue (A) | -144500 |
Other finance sources
| |
Bonds issued | 156000 |
Less: Premium | -6000 |
Less: Remaining balance transferred | -5500 |
Total of Other finance sources (B) | 144500 |
Net change in balance (A-B) | 0 |
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