Question

In: Accounting

In 2014, the City of Ahamo began work on a community center to be financed by...

In 2014, the City of Ahamo began work on a community center to be financed by a grant from the federal government and by the issuance of bonds.  The total cost of the community center was projected to be $ 9,000,000.  $2,000,000 was to come from the federal grant.  The rest will be financed by a serial bond issue.  

Record the following transactions on the books of the Capital Projects Fund and the Governmental Activities:.

a. Issued $800,000 of 9%, 120 days bond anticipation notes to be repaid from the proceeds of bonds.

Capital Projects Fund

Governmental Activities

b. The federal grant was recorded as a receivable: one-half of the grant is to be paid to the City of Ahamo in 2014, the rest will be received late in 2015. The 2015 receipt will not be available for use until 2015 because it will need to be appropriated by the federal government in 2015.  

Capital Projects Fund

Governmental Activities

c. A contract was let for the major portion of the grant to Kiwi and Sons Construction in the amount of $8,500,000.

Capital Projects Fund

Governmental Activities

d. Preliminary planning and engineering costs of $75,000 were paid to Westie’s Engineering. This amount had previously been encumbered.

Capital Projects Fund

Governmental Activities

e. An invoice in the amount of $1,200,000 was received from Kiwi for progress to date. A liability was recorded.

Capital Projects Fund

Governmental Activities

f. Cash was received from the federal government in the amount of $1,000,000.  

Capital Projects Fund

Governmental Activities

g. The city bonds were issued at 101, with the bond premium deposited directlyinto the debt service fund without going through the capital projects fund.  

Capital Projects Fund

Governmental Activities

i. The bond anticipation notes and interest on them were repaid.

Capital Projects Fund

Governmental Activities

j. The amount billed by Kiwi was paid less a 5% retainage.  

Capital Projects Fund

Governmental Activities

Solutions

Expert Solution

Journal Entry
1 Cash A/c $800,000
To 9% bond anticipation notes A/c $800,000
(Being issue of 9% bonds by the government)
2 Federal Grant Receivable $2,000,000
To Federal Grant $2,000,000
(Being recording of federal grant to be received)
3 No Entry
4 Westie's Engineering( engineering costs) $75,000
To cash $75,000
(Being preliminary planning and engineering costs paid)
5 Capital Projects Fund $1,200,000
To Kiwi and Sons contruction $1,200,000
(Being invoice received for work done till date)
6 Cash $1,000,000
To Federal Grant receivable $1,000,000
(Being one-half grant received from federal government)
7 Cash (8000*101) 808000
To Debt Service fund 8000
To City Bonds 800000
(Being city bond issued)
8 9% Bond anticipation notes A/c 800000
Interest On Bond 72000
To Cash 872000
(Being repayment of bonds)
9 Kiwi and Sons contruction 1140000
To Cash 1140000
(Being payment of bill by Kiwi with 5% retainage)

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