In Fulbright County, the Culture and Recreation Department constructed a library in one of the county’s high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the current fiscal year. The county operates on a calendar-year basis. The county issued $6,000,000 of 4 percent bonds, with interest payable semiannually on January 1 and July 1. The bonds sold for 101 on February 1. Proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue. A $650,000 federal grant was received to help finance construction of the library. The Library Special Revenue Fund transferred $250,000 for use in construction of the library. A construction contract was awarded in the amount of $6,800,000. The library was completed four months ahead of schedule. Total construction expenditures for the library amounted to $6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, $6,295,000 to building, and the remainder to equipment. The capital projects fund temporary accounts were closed to Fund Balance—Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment. Required: Make all necessary entries in the capital projects fund general journal and the governmental activities general journal at the government-wide level.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In Fulbright County, the Culture and Recreation Department constructed a library in one of the county’s high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the current fiscal year. The county operates on a calendar-year basis.

The county issued $6,000,000 of 4 percent bonds, with interest payable semiannually on January 1 and July 1. The bonds sold for 101 on February 1. Proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue.
A $650,000 federal grant was received to help finance construction of the library.
The Library Special Revenue Fund transferred $250,000 for use in construction of the library.
A construction contract was awarded in the amount of $6,800,000.
The library was completed four months ahead of schedule. Total construction expenditures for the library amounted to $6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, $6,295,000 to building, and the remainder to equipment.
The capital projects fund temporary accounts were closed to Fund Balance—Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment.

Required:

Make all necessary entries in the capital projects fund general journal and the governmental activities general journal at the government-wide level.

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