The following transactions tok place in the town of Burchette during 20X3: 1. A

Question

The following transactions tok place in the town of Burchette during 20X3:

1. A bond issue of $12,000,000 was authorized for the construction of a library, and the estimated bond issue proceeds and related appropriations were recorded in the General Ledger accounts of a new Capital Projects Fund.

2. The bonds were sold at a premium of $9,000.

3. The cost of issuing the bonds, $80,000, was paid.

4. An order was placed for materials estimated to cost $6,500,000.

5. Salaries and Wages of $500,000 were paid.

6. The premium, net of bond issuance costs, was transferred to a Debt Service Fund.

The following transactions took place in 20X4:

7. The materials were receieved; the actual cost was $6,585,000.

8. Salaries and wages of $4,010,000 were paid.

9. All outstanding bills were paid.

10. The project was completed. The accounts were closed, and the remaining balance was transferred to a Debt Service Fund.

a. Prepare all journal entries (budgetary and actual), including closing entries, to record the Capital Projects Fund transactions for 20X3 and 20X4.

b. Prepare a Capital Projects Fun balance sheet as of December 31, 20X3.

c. Prepare a Capital PRojects Fund Statement of Revenues, Expenditures, and Changes in Fund Balance for the project, including (1) the year ended December 31, 20X3, and (2) a separate budgetary combined comparison statement for the years ended December 31, 20X3 and 20x4.

Explanation / Answer

Journal entries for capital Project Fund 2013 1 Bank Account Dr 12009000 To Bond Account 12000000 To Securities Premium Account 9000 2 Bond issue Expenses Dr 80000 To Bank 80000 3 debt Service Account Dr 71000 Securities Premium Account Dr 9000 To Bond issue Expenses 80000 4 Salaries & Wages Account Dr 500000 To Bank Account 500000 2014 1 materials Account / Purchases Dr 6585000 Slar & Wages 4010000 To bank 10595000 2 Bond Account Dr 12000000 To Salaries & Wages Account 4510000 To materials Account / Purchases 6585000 To Debt Services account 905000

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