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3 years ago

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The City of McNeely sold bonds in the amount of $25,000,000 to finance the construction of a public health center. The bonds are

serial bonds and were sold at par on January 1, the first day of a fiscal year. Shortly thereafter a construction contract in the amount of $22,000,000 was signed and the contractor commenced work. By year-end the contractor had been paid in full for all billings to date amounting to $12,000,000. Prepare, in general journal form, all journal entries that should have been made during the fiscal year ended December 31 to record the preceding information in the capital projects fund. (No closing entry is required).

1 answer:

Orlov [11]3 years ago

7 0

Answer:

1. To Record the cash received on issue of bonds.

Date Account Titles and Explanation Debit Credit

Cash $25,000,000

Other financing uses-Bond proceeds $25,000,000

<em>(To record the cash received on the issue of Bond)</em>

2. To Record the inception of the construction contract.

Date Account Titles and Explanation Debit Credit

Encumbrances $22,000,000

Encumbrances outstanding $22,000,000

<em>(To Record the inception of the construction contract) </em>

3. To Record the encumbrances outstanding on account of the construction contract.

Date Account Titles and Explanation Debit Credit

Encumbrances outstanding $12,000,000

Encumbrances $12,000,000

<em> (To Record the encumbrances outstanding on account) </em>

Date Account Titles and Explanation Debit Credit

Construction Expenditure $12,000,000

Construction payable $12,000,000

<em> (To Record the encumbrances outstanding on account) </em>

<em />

4. To Record the transfer of the balance in the fund balance account.

Date Account Titles and Explanation Debit Credit

Other Financing sources - $25,000,000

Proceed of Bonds

Fund balance - Restricted $13,000,000

Construction Expenditure $12,000,000

<em> (To record the construction expenses paid)</em>

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