Chapter 18, Problem 18.15P

a

To determine

Introduction: Capital project fund includes financial resources acquired for capital projects such as the construction of capital facilities, acquisition for the benefit of citizens, for example, construction of parks. This fund is created only at the time of construction or acquisition of the facility and closed once it is achieved.

The entries for all the funds involved and also the closing entries for capital project fund.

Explanation of Solution

Particulars	Debit $	Credit $
CPE cash	5,080,000
Other financial sources − bond issue		5,000,000
Other financial sources − bond premium		80,000
(Issued bonds at premium for capital project fund)
Other financing uses − transfer in capital project fund	80,000
Cash		80,000
(Premium transferred to other financing uses for debit service fund)
Debit service fund Cash	80,000
Other financing sources − transfer in from capital project fund		80,000
(Premium in capital project transferred from debit service)
Capital project fund expense	45,000
Voucher payable		45,000
(Expense on account of capital project recognized)
Vouchers payable	45,000
Cash		45,000
(Paid cash for recognized vouchers)
Capital project fund encumbrances	4,500,000
Budgetary fund balance − reserved for Encumbrances		4,500,000
(Encumbrances for capital project created)
Capital project fund budgetary fund balance − reserved for Encumbrances	2,000,000
Encumbrances		2,000,000
(Encumbrances reversed at the time of designated expenditure)
Expenditure	2,000,000
Contracts payable		1,800,000
Contract payable − Retained percentage		200,000
(Designated expenditure recognized)
Capital project fund contracts payable	1,800,000
Cash		1,800,000
(Cash paid on contracts payable)
Closing entries on capital project fund:
Other financing sources − bond issue	5,000,000
Other financing sources − bond premium	80,000
Expenditures		2,045,000
Other financing uses − transfer out to debt service fund		80,000
Fund balance − unreserved		2,955,000
(Closing entry passed and transferring balance to fund balance unreserved)
Budgetary fund balance − reserved for encumbrances	2,500,000
Encumbrances		2,500,000
(Outstanding encumbrances at the end transferred to reserve fund account)
Fund balance − unreserved	2,500,000
Fund balance − reserved for encumbrances		2,500,000
(Outstanding encumbrances balance transferred to fund balance unreserved at the end of the year)

b

To determine

Introduction: Capital project fund includes financial resources acquired for capital projects such as the construction of capital facilities, acquisition for the benefit of citizens, for example, construction of parks. This fund is created only at the time of construction or acquisition of the facility and closed once it is achieved.

The balance sheet of capital project fund at June 30 20X3

Answer to Problem 18.15P

Net assets as per capital project fund balance sheet $3,155,000.

Explanation of Solution

W City

Capital Project Fund Balance Sheet

December 31, 20X2

	$	$
Assets:
Cash		3,155,000
Total assets		3,155,000
Liabilities and fund balance:
Contracts payable − retained percentage		200,000
Fund balance:
Reserved for encumbrances	2,500,000
Unreserved	455,000	2,955,000
Total liabilities and fund balance		3,155,000

c

To determine

Introduction: Capital project fund includes financial resources acquired for capital projects such as the construction of capital facilities, acquisition for the benefit of citizens, for example, construction of parks. This fund is created only at the time of construction or acquisition of the facility and closed once it is achieved.

The preparation of Statement of revenues, expenses and changes in fund net position for 20X3

Answer to Problem 18.15P

Fund balance as on June 30 20X3 $2,955,000.

Explanation of Solution

W City

Statement of Revenue, Expenses and

Change in Fund Net Assets

December 31, 20X2

	$	$
Expenditure:
Capital Outlays:
Building removal		45,000
Building constriction		2,000,000
Total expenditures		2,045,000
Deficiency of revenue over expenditures		(2,045,000)
Proceeds of serial bonds		5,080,000
Transfer out to debt service fund		(80,000)
Total other financing sources (uses)		5,000,000
Net change in fund balance		2,955,000
Fund balance July 1 20X2		0
Fund balance June 30 20X3		2,955,000