ACCT567 Falts City Problem 5-10 

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ACCT567 Falts City Problem 5-10
Falts City began work to improve certain streets to be financed by a bond issue and supplemented…

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Description

ACCT567 Falts City Problem 5-10

ACCT567 Falts City Problem 5-10

Capital Project Transactions A+

In 2011, Falts City began work to improve certain streets to be financed by a bond issue and supplemented by a federal grant. Estimated total cost of the project was $4,000,000; $2,500,000 was to come from the bond issue, and the balance from the federal grant. The capital projects fund to account for the project was designated as the Street Improvement Fund. The following transactions occurred in 2011:

  1. Issued $100,000 of 6 percent bond anticipation notes to be repaid from the proceeds of bonds in 180 days.
  2. The federal grant was recorded as a receivable; half of the grant is to be paid to Falts City in 2011 and the remainder late in 2012. The grantor specifies that the portion to be received in 2012 is not available for use until 2012 because there is no guarantee that the federal government will appropriate the 2012 portion.
  3. A contract was let to Appel Construction Company for the major part of the project on a bid of $2,700,000.
  4. An invoice received from the city’s Stores and Services Fund for supplies provided to the Street Improvement Fund in the amount of $60,000 was approved for payment. (This amount had not been encumbered.)
  5. Preliminary planning and engineering costs of $69,000 were paid to the Mid-Atlantic Engineering Company. (This cost had not been encumbered.)
  6. A voucher payable was recorded for an $18,500 billing from the local telephone company for the cost of moving some of its underground properties necessitated by the street project.
  7. An invoice in the amount of $1,000,000 was received from Appel for progress to date on the project. The invoice was consistent with the terms of the contract, and a liability was recorded in the amount of $1,000,000.
  8. Cash received during 2011 was as follows:
  9. The bond anticipation notes and interest thereon were repaid (see Transaction 1). Interest is an expenditure of the capital projects fund and, per GASB standards, will not be capitalized as part of the cost of street improvements.
  10. The amount billed by the contractor (see Transaction 7) less 5 percent retainage was paid.
  11. Temporary investments were purchased at a cost of $1,800,000.
  12. Closing entries were prepared as of December 31, 2011.

Required

  1. Prepare journal entries to record the preceding information in the general ledger accounts for the Street Improvement Fund. (You may ignore the entries that would also be required in the governmental activities general journal at the government-wide level.)
  2. Prepare a balance sheet for the Street Improvement Fund as of December 31, 2011.
  3. Prepare a statement of revenues, expenditures, and changes in fund balance for the period, assuming that the date of authorization was July 1, 2011.