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The city approved bonds to fund construction of a new jail. Transactions were recorded for the bond proceeds, state grant, architectural and construction contracts, and payments. At the end of the year remaining cash was transferred to the debt service fund and payables were paid.

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Drifta Jnr Mukani
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33 views2 pages

Aa

The city approved bonds to fund construction of a new jail. Transactions were recorded for the bond proceeds, state grant, architectural and construction contracts, and payments. At the end of the year remaining cash was transferred to the debt service fund and payables were paid.

Uploaded by

Drifta Jnr Mukani
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Capital Projects Fund Transactions The voters of the City of Monroe approved the issuance of tax-

supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City
Jail. Architects were to be retained, and construction was to be completed by outside contractors. In
addition to the bond proceeds, a $1,320,000 grant was expected from the state government.

Required: a. Open a general journal for the City Jail Annex Construction Fund. Record the following
transactions and post to the general ledger.

Only Accounts to be used: Cash, Accounts Payable, Contracts Payable Retained Percentage, Due
from State Government, Encumbrances, Budgetary Fund Balance- Reserve for Encumbrances,
Capital Expenditures, Other Financing Uses Transfers Out, Revenues, Other Financing Sources Bond
Proceeds, Other Financing Sources Bond Premuim

(1) On January 1, 2015, the total face amount of bonds bearing an interest rate of 8 percent was sold
at a $200,000 premium. Principal amounts of $200,000 each will come due annually over a 20-year
period commencing January 1, 2016. Interest payment dates are July 1 and January 1. The first
interest payment will be July 1, 2015. The premium was transferred to the City Jail Debt Service Fund
for the future payment of principal on the bonds.

(2) The receivable from the state government was recorded.

(3) Legal and engineering fees early in the project were paid in the amount of $116,000. This amount
had not been encumbered.

(4) Architects were engaged at a fee of $250,000.

(5) Preliminary plans were approved, and the architects were paid 20 percent of the fee.

(6) The complete plans and specifications were received from the architects and approved. A liability
in the amount of $150,000 to the architects was approved and paid.

(7) Bids were received and opened in public session. After considerable discussion in City Council,
the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a
contract was signed.

(8) The contractor required partial payment of $1,350,000. Payment was approved and vouchered
with the exception of a 5 percent retainage.
(9) Cash in the full amount of the grant was received from the state government.

(10) Furniture and equipment for the annex were ordered at a total cost of $439,500.

(11) Payment was made to the contractor for the amount payable (see 8 above).

(12) The contractor completed construction and requested payment of the balance due on the
contract. After inspection of the work, the amount, including the past retainage, was approved for
payment and then paid.

(13)The furniture and equipment were received at a total actual installed cost of $439,300. Invoices
were approved for payment.

(14) The remainder of the architects’ fees was approved for payment.

(15) The City Jail Construction Fund paid all outstanding accounts payables ($ 489,300) on December
31, 2015.

(16) The remaining cash was transferred to the City Jail Debt Service Fund.

b. Post the entries to the City Jail Construction Fund general ledger.

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