Chapter 5, Problem 23EP

Make all necessary entries in a capital projects fund and the government-wide governmental activities general journal for each of the following unrelated transactions. (The General Fund should not be used.)

1. 1. A town secures a note payable in the amount of $150,000 to pay initial expenses for construction of a new police station. Town administrators plan to repay this note within three months with tax revenues and issue a construction bond shortly thereafter.
2. 2. A county secures a bond anticipation note in the amount of $500,000 to pay initial expenses for construction of a convention center. The board of county commissioners recommended that the finance department refinance the bond anticipation note by issuing a construction bond when construction activity begins.
3. 3. Due to an unexpected change in interest rates, a village issued a $2,500,000 bond at 98 percent of par value. The bond was issued to fund construction of a bike path, including restrooms and picnic shelters. It is expected that the shortage will be covered by a future transfer from another fund.
4. 4. A city issued a $5,000,000 bond at 101 to fund construction of a city hall addition. (You can assume that the premium is directly deposited in the debt service fund, and you need not prepare the debt service fund entry.)
5. 5. A borough sold $4,000,000 of 6 percent construction-related bonds dated January 1 on March 1 at par. The construction is related to governmental activities.