Question

In Fulbright County, the Parks and Recreation Department constructed a library in one of the county’s high growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the 2017 fiscal year.

Required

Prepare a journal entry for capital projects fund and governmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Transaction Fund General Journal Debit Credit 1. The county issued $7,800,000, 4 percent bonds, with interest payable semiannually on June 30 and December 31. The bonds sold for 101 on July 30, 2016. Proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue. Assume the premium and interest are recorded directly in the debt service fund. 1 Capital Projects Fund Cash Other Financing Sources—Proceeds of Bonds Governmental Activities Cash Bonds Payable Premium on Bonds Payable Interest Payable 2. A $830,000 federal grant was received to help finance construction of the library. 2 Capital Projects Fund Cash Revenues Governmental Activities Cash Program Revenues—Culture and Recreation—Capital Grants and Contributions 3. The Library Special Revenue Fund transferred $430,000 for use in construction of the library. 3 Capital Projects Fund Cash Other Financing Sources—Interfund Transfers In Governmental Activities No Journal Entry Required 4. A construction contract was awarded in the amount of $6,980,000. 4 Capital Projects Fund Encumbrances Encumbrances Outstanding Governmental Activities No Journal Entry Required 5. The library was completed on June 1, 2017, four months ahead of schedule. Total construction expenditures for the library amounted to $9,041,000. When the project was completed, the cost of the library was allocated as follows: $290,000 to land, $6,385,000 to building, and the remainder to equipment. 5a Capital Projects Fund Record the completion of construction of the library. 5b Record the payment upon completion of capital project. 5c Governmental Activities Record the completion of construction of the library. 5d Record the capitalization of each item. 6. The capital projects fund temporary accounts were closed to Fund Balance—Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment. 6a Capital Projects Fund Close the temporary accounts to Fund Balance—Restricted. 6b Record the transfer to the debt service fund. 6c Close the remaining temporary account to Fund Balance-Restricted. 6d Governmental Activities

Answer 1

1.

1	Capital Projects Fund	Cash	7,800,000
		Other Financing Sources—Proceeds of Bonds		7,800,000
	Governmental Activities	Cash	8,138,000
		Bonds Payable		7,800,000
		Premium on Bonds Payable(7800000/100*101-7800000)		78,000
		Interest Payable*(7800000*4%*5/6)		260,000

*Interest is for 5 months starting July 30 to December 31.

2.

2	Capital Projects Fund	Cash	830,000
		Revenues		830,000
	Governmental Activities	Cash	830,000
		Program Revenues—Culture and Recreation—Capital Grants and Contributions		830,000

3.

3	Capital Projects Fund	Cash	430,000
		Other Financing Sources—Interfund Transfers In		430,000
	Governmental Activities	*No Journal Entry Required

*If there is an transfer between government funds, there is no journal entry recorded.

4.

4	Capital Projects Fund	Encumbrances	6,980,000
		Encumbrances Outstanding		6,980,000
	Governmental Activities	*No Journal Entry Required

*It is a budgetary transactions, so it is not recorded in government journal.

5.

5a	Capital Projects Fund	Record the completion of construction of the library.
		Encumbrances Outstanding	6,980,000
		Encumbrances		6,980,000
5b		Record the payment upon completion of capital project.
		Construction Expenditure	9,041,000
		Cash		9,041,000
5c	Governmental Activities	Record the completion of construction of the library.
		Contruction Work in Progress	9,041,000
		Cash		9,041,000
5d		Record the capitalization of each item.
		Land	290,000
		Building	6,385,000
		Equipment	2,366,000
		Contruction Work in Progress		9,041,000

6.

6a	Capital Projects Fund	Close the temporary accounts to Fund Balance—Restricted.
		Other Financing Sources—Proceeds of Bonds	7,800,000
		Other Financing Sources—Interfund Transfers In	430,000
		Revenues	830,000
		Construction Expenditure		9,041,000
		Fund Balance		19,000
6b		Record the transfer to the debt service fund.
		Interfund Transfers Out	19,000
		Cash		19,000
6c		Close the remaining temporary account to Fund Balance-Restricted.
		Fund Balance	19,000
		Interfund Transfers Out		19,000
6d	Governmental Activities	*No Journal Entry Required

* No entry sing the closing relates to fund only.