Question

The following facts relate to questions 1 through 10:

The City of Oxford, Mississippi (population just under 24,000) passed a bond issue for $2,500,000, 4.5 percent, semiannual interest, 10 year bonds to finance the construction of a second high school to be called Yoknapatawpha High, named in memory of the Pulitzer Prize winning author, William Faulkner. The State also contributed $110,000 for construction of the gymnasium. The contractor selected then submitted her contract for $2,080,000 to commence on January 2, 2019, with the project’s estimated completion in late 2019.

1. The contractor submitted her signed contract to the City of Oxford. The entry to record the contract in the Debt Services Fund would include a:

A. Debit to Encumbrances—2019, $2,500,000.

B. Debit to Construction Work-in-Progress, $2,080,000.

C. Credit to Encumbrances—2019, $2,080,000.

D. Credit to Encumbrances Outstanding—2019, $2,080,000.

2. The money from the State of Mississippi of $110,000 was received by the City of Oxford’s General Fund. The monies were then transferred from the General Fund to the Capital Project Fund. The entry in the General Fund receiving the grant money from the state would include a:

A. Credit to Program Revenues—Public Education—Capital Grants and Contributions, $110,000.

B. Credit to Revenues, $110,000.

C. Debit to Other Financing Uses—Transfers-out, $110,000.

D. Credit to Other Financing Uses—Transfers-in, $110,000.

3. The entry in the General Fund transferring the state monies to the Capital Projects Fund would include a:

A. Debit to Cash, $110,000.

B. Credit to Cash, $110,000.

C. Debit to Other Financing Sources, $110,000.

D. Credit to Other Financing Uses, $110,000.

4. The entry in the Capital Projects Fund receiving the transferred state monies from the General Fund would include a:

A. Credit to Other Financing Sources, $110,000.

B. Debit to Other Financing Uses, $110,000.

C. Credit to Cash, $110,000.

D. Credit to Grants Receivable, $110,000. 3

5. When the contractor submitted a $700,000 progress billing, the following entry in the Capital Projects Fund would include:

A. Debit to Encumbrances—2019, $700,000.

B. Credit to Cash, $700,000.

C. Debit to Encumbrances Outstanding—2019, $700,000.

D. Debit to Construction-work-in progress, $700,000.

6. Assuming the partial billing was approved for payment and the expenditure and liability (contracts payable) was recorded for $700,000; however, Oxford has a policy of not paying 100 percent, but retaining 20 percent as a retained percentage. The entry in the Capital Projects Fund to record the allowed payment and retained percentage would include:

A. Credit to Cash, $560,000.

B. Debit to Contracts Payable, $560,000.

C. Credit to Contracts Payable—Retained Percentage, $560,000.

D. Debit to Contracts Payable, $140,000.

7. Prior to the receipt of the bond proceeds, Oxford needed funds and went to United Southern Bank to borrow $600,000 in bond anticipation notes (BANs), at 5 percent, which were to be paid back using the proceeds of the $2,500,000 bond issue. The entry at the government-wide level to record the receipt of the bond anticipation notes would include a:

A. Credit to Other Financing Sources—proceeds of BANs, $600,000.

B. Debit to Cash, $1,900,000.

C. Credit to Bonds Payable, $600,000.

D. Debit to Cash, $600,000.

8. Assume the bond issue commences, and the $2,500,000 proceeds are received. Oxford repays the bond anticipation notes in full along with $7,500 in interest. The entry recorded in the Capital Projects Fund to repay the bond anticipation notes would include a:

A. Debit to Other Financing Uses—Retirement of BANs, $600,000.

B. Credit to Cash, $600,000.

C. Debit to Bond Anticipation Notes Payable, $600,000.

D. Debit to Expenses—Interest on Long-term Debt, $7,500.

9. Assume that at the conclusion of the construction project that the total costs totaled $3,200,000. This included some cost overruns. Assuming the high school passes all inspections and the asset is placed into service, the re-class entry to record the Building in the Capital Projects Fund would include:

A. a Credit to Buildings, $3,200,000.

B. a Debit to Buildings, $3,200,000.

C. No entry would be recorded in the Capital Projects Fund.

D. a Credit to Encumbrances—2019, $3,200,000. 4

10. In the Capital Projects Fund, which of the following accounts would be part of the closing entry at the end of the project?

A. Cash.

B. Other Financing Sources—Proceeds of Bonds.

C. Expenses—Interest on Long-term Debt.

D. Construction Work in Progress.

Answer 1

1. The contractor submitted her signed contract to the City of Oxford. The entry to record the contract in the Debt Services Fund would include a:

A. Debit to Encumbrances—2019, $2,500,000.

2. The money from the State of Mississippi of $110,000 was received by the City of Oxford’s General Fund. The monies were then transferred from the General Fund to the Capital Project Fund. The entry in the General Fund receiving the grant money from the state would include a:

D. Credit to Other Financing Uses—Transfers-in, $110,00

3. The entry in the General Fund transferring the state monies to the Capital Projects Fund would include a:

C. Debit to Other Financing Sources, $110,000.

4. The entry in the Capital Projects Fund receiving the transferred state monies from the General Fund would include a:.

B. Debit to Other Financing Uses, $110,000.

5. When the contractor submitted a $700,000 progress billing, the following entry in the Capital Projects Fund would include:

D. Debit to Construction-work-in progress, $700,000.

6. Assuming the partial billing was approved for payment and the expenditure and liability (contracts payable) was recorded for $700,000; however, Oxford has a policy of not paying 100 percent, but retaining 20 percent as a retained percentage. The entry in the Capital Projects Fund to record the allowed payment and retained percentage would include:

A. Credit to Cash, $560,000.

7. Prior to the receipt of the bond proceeds, Oxford needed funds and went to United Southern Bank to borrow $600,000 in bond anticipation notes (BANs), at 5 percent, which were to be paid back using the proceeds of the $2,500,000 bond issue. The entry at the government-wide level to record the receipt of the bond anticipation notes would include a:

D. Debit to Cash, $600,000.

8. Assume the bond issue commences, and the $2,500,000 proceeds are received. Oxford repays the bond anticipation notes in full along with $7,500 in interest. The entry recorded in the Capital Projects Fund to repay the bond anticipation notes would include a:

C. Debit to Bond Anticipation Notes Payable, $600,000.

9. Assume that at the conclusion of the construction project that the total costs totaled $3,200,000. This included some cost overruns. Assuming the high school passes all inspections and the asset is placed into service, the re-class entry to record the Building in the Capital Projects Fund would include:

C. No entry would be recorded in the Capital Projects Fund.

10. In the Capital Projects Fund, which of the following accounts would be part of the closing entry at the end of the project?

A. Cash.