The bridge is to be constructed by a private contracting firm, Defliese & Co. Th
ID: 2461644 • Letter: T
Question
The bridge is to be constructed by a private contracting firm, Defliese & Co. The city's workforce will do related earthmoving and landscape work. The estimated costs of the bridge project are:
Bridge Structure:
Defliese & Co. contract $ 2,400,000
Earthmoving and Landscaping
Labor $300,000
Machine time 200,000
Fuel and materials 100,000 600,000
$ 3,000,000
Defliese & Co. is to post a performance bond guaranteeing the quality and timeliness of its work. In addition, 5% of the amounts payable to Defliese & Co. under the contract will be retained as a further guarantee of the quality of its work. This retainage will be remitted upon final inspection of the bridge and its acceptance by the city.
When the bridge capital project was officially authorized by ordinance, the City of Wonder controller recorded estimated revenues and appropriations in the amounts listed above.
The following transactions occurred during 2016:
(1) The contract with Defliese & Co. was signed and work began on the bridge.
(2) Bonds were sold to help finance the project at a slight premium (101) for $909,000.
(3) Fuel and materials ordered during the year totaled $55,000.
(4) The state grant was received; but the governing body authorized only a $130,000 transfer from the general fund for now. The remainder will be authorized later.
(5) Invoices were received and vouchered for fuel and materials, $49,000 (encumbered at $48,000); machine time, $81,000; and the Defliese & Co. contract, $1,000,000 (as encumbered).
(6) Cash disbursements thus far were:
Vouchers Payable $970,000
Investments 400,000
Labor 140,000
(7) Filed for federal grant reimbursement for 40% of the expenditures (transactions 5 & 6) incurred for the project thus far.
(8) Accrued interest receivable on investments at year end was $18,000.
(9) Invoices were received and vouchered for fuel and materials, $43,000 (partially encumbered at $7,000); machine time, $108,000; and the Defliese & Co. contract, $1,410,000 (encumbered at $1,400,000); including a $10,000 adjustment in the contract, approved by the governing body, for necessary work not anticipated.
(10) Cash receipts during the remainder of the year were:
Federal grant $1,198,000
Investments (including interest) 430,000
Operating transfers from Gen. Fund 170,000
(11) Cash disbursements made during the remainder of the year were:
Vouchers payable $1,600,500
Payroll 129,000
(12) Under the terms of the federal grant; (a) the $10,000 additional payment to Defliese & Co. is not an allowable cost; (b) only the actual costs for earthmoving and landscaping are allowable; and (c) the otherwise allowable costs must be reduced by the interest earned by investing project monies. Accordingly, $30,000 was recorded as payable to the federal government, pending final inspection of the completed bridge.
(13) The new bridge was approved by the inspectors and accepted by the governing body which ordered that (a) the retained percentage be paid to the contractor, (b) the federal government be repaid (prior transaction), and (c) the remaining capital project fund balance be transferred to the related Debt Service Fund.
Required:
a. Prepare all entries, including closing entries, to record the Capital Projects Fund transactions and post to ledger accounts (all in proper form – please use Excel).
Explanation / Answer
Remarks : Excel file can not be uploaded for posting of these journal entries to ledger accounts directly linked. So, journal entries with working is pasted for understanding
Sources of Funds Application of Funds Limit Actual Federal Grant 1200000 40% Delfie Contract 2400000 1000000 1400000 State Grant 600000 600000 Labour 300000 140000 129000 Bonds issued 900000 Machine time 200000 81000 108000 Transfer from general funds 300000 Fuel & Material 100000 48000 7000 3000000 3000000 1269000 1644000 2913000 Eligible federal Grant (40%) 1165200 Total Grant received 1198000 Net refund 32800 Add Non allowable cost 10000 30000 Total refund due 72800 1) Bonds issued at premium Cash A/c Dr 909000 To Bonds payble Cr 900000 To Premium onn Bonds Payble Cr 9000 2) Fuel & Material Ordered No Entry 3) State Grant received Cash A/c Dr 600000 To Government Grant Cr 600000 4) Transfer from general funds General funds Dr 130000 To P & L Cr 130000 5) Invoices received Fuel & material Purchase Dr 48000 Machine Time Dr 81000 Construction contract Dr 1000000 To Account Payble Cr 1129000 6) Cash Disbursement Account Payble Dr 970000 Investments Dr 400000 Labour wages Dr 140000 To Cash Cr 1510000 7) Filed for federal grant No Entry 8) Accrued Interest Receivable Interest receivable Dr 18000 To profit & loss Cr 18000 9) Invoices received Fuel & material Purchase Dr 7000 Machine Time Dr 108000 Construction contract Dr 1400000 To Account Payble Cr 1515000 10) Cash Receipt Cash A/c Dr 1628000 To Investment Cr 430000 To federal Grant Cr 1198000 P& L a/c Dr 170000 To gerneral funds Cr 170000 11) Cash Disbursement Account Payble Dr 1600500 Labour wages Dr 129000 To Cash Cr 1729500 12) Cash refunded to Federal Government Federal Grant Dr 72800 To Cash Cr 72800Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.