Residents from the Town of Mountain View authorized a $5,000,000 renovation to t

Question

Residents from the Town of Mountain View authorized a $5,000,000 renovation to their historic town hall on November 15, 2016. Financing for the project consists of $2,100,000 from a 3 percent serial bond issue, $1,600,000 from a state grant, and $1,300,000 from the General Fund. Debt service for the serial bonds will be provided by a one-quarter-cent city sales tax imposed on every dollar of sales in the city. The town has a calendar year-end. Prepare journal entries to record the related transactions in the town’s capital projects fund, debt service fund, and governmental activities at the government-wide level. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

Journal entry to record capital project fund

Embrances dr 5,000,000

Reserves for Embrances 5,000,000

In case of government activity no such journal entry has been passed.

When there is issue of serial bond, state grant and general fund, following entry has been passed

Bonds 2,100,000

State Grant 1,600,000

General Fund 1,300,000

Cash 5,000,000

(being issue of bonds)

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