Chapter 18, Problem 18.6E

Capital Projects Fund Entries and Statements
The City of Waterman established a capital projects fund for the construction of an access ramp from the parking garage to the city’s office building to be used by individuals with disabilities. The estimated cost of the ramp is $200,000. On January 1, 20X2, a 10 percent, $150,000 bond issue was sold at 104.0 with the premium transferred to the debt service fund. At that date, the county board provided a $50,000 grant. After a period of negotiation, the city council awarded a construction contract for $182,000 on April 5, 20X2. The ramp was completed on August 8, 20X2; its actual cost was $189,000. The city council approved payment of the total actual cost of $189,000.

In addition to the $189,000, the ramp was carpeted with all-weather material at a cost of $5,500. On November 3, 20X2, the city council gave the final approval to pay for the ramp and the carpeting. After all bills were paid, the remaining fund balance was transferred to the debt service fund.

Required

1. Prepare entries for the capital projects fund for 20X2.
2. Prepare a statement of revenues, expenditures, and changes in fund balance for the capital projects fund for 20X2.

To determine

Introduction: Interim reporting is made in between the fiscal year. It is made before the completion of fiscal year in mostly public corporation for taking various decisions for the remaining period. Mostly quarterly and half yearly report is prepared.

The journal entries for capital project fund for 20X2.

Explanation of Solution

The journal entries for capital project fund for 20X2 is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X2	Cash	50000
	To revenue account-Grant		50000
	(Recording entry for receipt of grant from country board)
January 1, 20X2	Cash	156000
	To Other financing sources-Bond account		150000
	To Other financing sources-Bond premium		6000
	(Recording entry for issuing bonds at premium)
January 1, 20X2	Other financing sources-Transfer to debt service fund	6000
	To cash		6000
	(Recording entry for transfer of bond premium to debt service fund)
April 5, 20X2	Encumbrances-construction contract	182000
	To Budgetary fund balance-Assigned for encumbrances		182000
	(Recording entry for construction contract awarded)
August 8, 20X2	Budgetary fund balance-Assigned for encumbrances	182000
	To Encumbrances-construction contract		182000
	(Recording entry to reverse the effect of construction contract as ramp was completed)
August 8, 20X2	Expenditure-Capital expense	189000
	To Contract payable		189000
	(Recording entry for approval of payment of all construction expense)
August 8, 20X2	Expenditures	5500
	To vouchers payable		5500
	(Recording entry for expense incurred for carpeting all-weather material to building)
November 3, 20X2	Contract payable	189000
	Vouchers payable	5500
	To Cash		194500
	(Recording entry for payment of expenses related to construction of ramp)
November 3, 20X2	Revenue account-Grant	50000
	Other financing sources-Bond account	150000
	Other financing sources-Bond premium	6000
	To fund balance-unassigned		206000
	(Recording entry for closing nominal accounts)
November 3, 20X2	Fund balance-unassigned	200500
	To Expenditures		194500
	To Other financing sources-Transfer to debt service fund		6000
	(Recording entry for closing nominal accounts)
November 3, 20X2	Other financing sources-Transfer to debt service fund	5500
	To cash		5500
	(Recording entry for transfer of remaining amount to debt service fund)
November 3, 20X2	Fund balance-unassigned
	To Other financing sources-Transfer to debt service fund
	(Recording entry to close balance of debt service fund)

To determine

Introduction: Interim reporting is made in between the fiscal year. It is made before the completion of fiscal year in mostly public corporation for taking various decisions for the remaining period. Mostly quarterly and half yearly report is prepared.

The statement of revenues, expenditures and changes in fund balance for capital projects fund.

Explanation of Solution

The statement of revenues, expenditures and changes in fund balance for capital projects fund is as follows:

Particulars	Amount ($)
Revenue- Country grant	50000
Expenditure-Capital expense (189000+5500)	-194500
Expense over revenue (A)	-144500
Other finance sources
Bonds issued	156000
Less: Premium	-6000
Less: Remaining balance transferred	-5500
Total of Other finance sources (B)	144500
Net change in balance (A-B)	0