80.2K

Verified Solution

Link Copied!

5-C. Part 1. Capital Projects Fund Transactions The voters of the City of Monroe approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City Jail. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $1,335,000 grant was expected from the state government. Required: a. Record the following transactions in the general journal and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2020, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $200,000 premium. Principal amounts of $200,000 each will come due annually over a 20-year period commencing January 1, 2021. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2020. The premium was transferred to the City Jail Debt Service Fund for the future payment of principal on the bonds. (2) The receivable from the state government was recorded. (3) Legal and engineering fees early in the project were paid in the amount of $119,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $250,000. (5) Preliminary plans were approved, and the architects were paid $50,000 (50 percent of the fee). (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $150,000 to the architects was approved and paid. (7) Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $1,350,000. Payment was approved and vouchered with the exception of a 5 percent retainage. (9) Cash in the full amount of the grant was received from the state government. (10) Furniture and equipment for the annex were ordered at a total cost of $459,500. (11) Payment was made to the contractor for the amount payable (see 8 above). (12) The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was approved for payment and then paid. (13) The furniture and equipment were received at a total actual installed cost of $459,300. Invoices were approved for payment. (14) The remainder of the architects' fees was approved for payment. (15) The City Jail Construction Fund paid all outstanding accounts payables ($ 509,300) on December 31, 2020. (16) The remaining cash was transferred to the City Jail Debt Service Fund. b. Post the entries to the City Jail Construction Fund general ledger. c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 2. Existing Debt Service Fund Transactions The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service a $16,000,000, 3 percent tax-supported bond issue. As of December 31, 2019, this serial bond issue had a balance of $12,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 and July 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2020, were Cash with Fiscal Agent and Fund BalanceRestricted for Debt Service, each with balances of $412,000. (Revenues were raised and collected in cash in 2019 in order to be able to pay bond principal and interest due on January 1, 2020.) The government chose not to accrue interest payable. Required: a. Prepare journal entries for the following transactions in the general journal of the City Hall Debt Fund.Control accounts are not necessary. (1) The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. (2) Cash in the amount of $574,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest of $ 174,000 due that day and $400,000 in checks were mailed for bonds maturing that day. (4) Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). The government elected to not accrue the interest or principal at year-end. b. Post the entries to the City Hall Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. Assume any remaining net resources are classified as Fund Balance - Restricted for Debt Service. Complete this question by entering your answers in the tabs below. City Hall Debt City Hall Debt Services Service T Accounts Closing Entry Prepare the necessary entries for the City Hall Debt Service Fund transactions. Control accounts are not necessary. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) City Hall Debt Services City Hall Debt Service T Accounts Closing Entry Prepare the necessary entries for the City Hall Debt Service Fund transactions. Control accounts are not necessary. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 > The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. Note: Enter debits before credits. Transaction General Journal Debit Credit 01 Record entry Clear entry View general journal 2 Record the receipt of Cash in the amount of $574,000 from the General Fund on June 30. 3 Record the transfer of cash in the amount of $574,000 to the fiscal agent. Record the payments made by the fiscal agent for the bonds maturing in the amount of $400,000, as well as the interest in the amount of $174,000, paid that day. 5 Record the receipt of Cash in the amount of $568,000 from the General Fund on December 31. Record the transfer of cash in the amount of $568,000 to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). Note: = journal entry has been entered City Hall Debt City Hall Debt Service T Accounts Closing Entry Services Post the entries to the City Hall Debt Service Fund ledger (T-accounts). Cash Cash with Fiscal Agent Beg. bal. Beg. bal. End. bal. End. bal. 0 Fund Balance Restricted For Debt Service Expenditures-Bond Interest Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Expenditures-Bond Principal Other Financing Sources-Transfer In Beg. bal. Beg. bal. City Hall DSF Fund Balance Beg. bal. Preclosing End. bal 0 Journal entry worksheet Record the closing entries for the City Hall Debt Service Fund to determine the fund balance. Note: Enter debits before credits. Transaction General Journal Debit Credit CI.2 Record entry Clear entry View general journal 5-C. Part 1. Capital Projects Fund Transactions The voters of the City of Monroe approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new City Jail. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $1,335,000 grant was expected from the state government. Required: a. Record the following transactions in the general journal and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2020, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $200,000 premium. Principal amounts of $200,000 each will come due annually over a 20-year period commencing January 1, 2021. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2020. The premium was transferred to the City Jail Debt Service Fund for the future payment of principal on the bonds. (2) The receivable from the state government was recorded. (3) Legal and engineering fees early in the project were paid in the amount of $119,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $250,000. (5) Preliminary plans were approved, and the architects were paid $50,000 (50 percent of the fee). (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $150,000 to the architects was approved and paid. (7) Bids were received and opened in public session. After considerable discussion in City Council, the low bid from Hardhat Construction Company in the amount of $4,500,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $1,350,000. Payment was approved and vouchered with the exception of a 5 percent retainage. (9) Cash in the full amount of the grant was received from the state government. (10) Furniture and equipment for the annex were ordered at a total cost of $459,500. (11) Payment was made to the contractor for the amount payable (see 8 above). (12) The contractor completed construction and requested payment of the balance due on the contract. After inspection of the work, the amount, including the past retainage, was approved for payment and then paid. (13) The furniture and equipment were received at a total actual installed cost of $459,300. Invoices were approved for payment. (14) The remainder of the architects' fees was approved for payment. (15) The City Jail Construction Fund paid all outstanding accounts payables ($ 509,300) on December 31, 2020. (16) The remaining cash was transferred to the City Jail Debt Service Fund. b. Post the entries to the City Jail Construction Fund general ledger. c. Prepare and post an entry closing all nominal accounts to Fund Balance. 5-C. Part 2. Existing Debt Service Fund Transactions The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service a $16,000,000, 3 percent tax-supported bond issue. As of December 31, 2019, this serial bond issue had a balance of $12,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 and July 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2020, were Cash with Fiscal Agent and Fund BalanceRestricted for Debt Service, each with balances of $412,000. (Revenues were raised and collected in cash in 2019 in order to be able to pay bond principal and interest due on January 1, 2020.) The government chose not to accrue interest payable. Required: a. Prepare journal entries for the following transactions in the general journal of the City Hall Debt Fund.Control accounts are not necessary. (1) The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. (2) Cash in the amount of $574,000 was received from the General Fund on June 30 and was transferred to the fiscal agent. (3) The fiscal agent reported that checks dated July 1 had been mailed to bondholders for interest of $ 174,000 due that day and $400,000 in checks were mailed for bonds maturing that day. (4) Cash in the amount of $568,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). The government elected to not accrue the interest or principal at year-end. b. Post the entries to the City Hall Debt Service Fund ledger (t-accounts). c. Prepare and post an entry closing all nominal accounts to Fund Balance. Assume any remaining net resources are classified as Fund Balance - Restricted for Debt Service. Complete this question by entering your answers in the tabs below. City Hall Debt City Hall Debt Services Service T Accounts Closing Entry Prepare the necessary entries for the City Hall Debt Service Fund transactions. Control accounts are not necessary. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) City Hall Debt Services City Hall Debt Service T Accounts Closing Entry Prepare the necessary entries for the City Hall Debt Service Fund transactions. Control accounts are not necessary. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 > The fiscal agent reported that $180,000 in checks had been mailed to bondholders for interest due on January 1, and $400,000 in checks were mailed for bonds maturing that day. Note: Enter debits before credits. Transaction General Journal Debit Credit 01 Record entry Clear entry View general journal 2 Record the receipt of Cash in the amount of $574,000 from the General Fund on June 30. 3 Record the transfer of cash in the amount of $574,000 to the fiscal agent. Record the payments made by the fiscal agent for the bonds maturing in the amount of $400,000, as well as the interest in the amount of $174,000, paid that day. 5 Record the receipt of Cash in the amount of $568,000 from the General Fund on December 31. Record the transfer of cash in the amount of $568,000 to the fiscal agent to be used for the interest and principal due on January 1 (next fiscal year). Note: = journal entry has been entered City Hall Debt City Hall Debt Service T Accounts Closing Entry Services Post the entries to the City Hall Debt Service Fund ledger (T-accounts). Cash Cash with Fiscal Agent Beg. bal. Beg. bal. End. bal. End. bal. 0 Fund Balance Restricted For Debt Service Expenditures-Bond Interest Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Expenditures-Bond Principal Other Financing Sources-Transfer In Beg. bal. Beg. bal. City Hall DSF Fund Balance Beg. bal. Preclosing End. bal 0 Journal entry worksheet Record the closing entries for the City Hall Debt Service Fund to determine the fund balance. Note: Enter debits before credits. Transaction General Journal Debit Credit CI.2 Record entry Clear entry View general journal

Answer & Explanation Solved by verified expert

See Answer