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Chapter 5 ? Accounting for Other Governmental Fund...

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Chapter 5 ? Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent 5?C. Part 1. Capital Projects Fund Transactions The voters of the City of Everlasting Sunshine approved the issuance of tax-supported bonds in the face amount of $4,000,000 for the construction and equipping of a new annex to the City Hall. Architects were to be retained, and construction was to be completed by outside contractors. In addition to the bond proceeds, a $500,000 grant was expected from the state government. Required: a. Open a general journal for the City Hall Annex Construction Fund. Record the following transactions and post to the general ledger. Control accounts are not necessary. (1) On January 1, 2012, the total face amount of bonds bearing an interest rate of 8 percent was sold at a $50,000 premium. The bonds are to mature in blocks of $200,000 each year over a 20-year period commencing January 1, 2013. Interest payment dates are July 1 and January 1. The first interest payment will be July 1, 2012. The premium was transferred to the City Hall Annex 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 $53,000. This amount had not been encumbered. (4) Architects were engaged at a fee of $210,000. (5) Preliminary plans were approved, and the architects were paid 20 percent of the fee. (6) The complete plans and specifications were received from the architects and approved. A liability in the amount of $126,000 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 $3,800,000 was accepted, and a contract was signed. (8) The contractor required partial payment of $2,000,000. 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 $410,000. (11) Payment was made to the contractor for the amount vouchered (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 vouchered and paid. (13) Furniture and equipment were received at a total actual installed cost of $405,550. Invoices were approved for payment. (14) The remainder of the architects? fees was approved for payment. (15) The City Hall Annex Construction Fund paid all outstanding liabilities on December 31, 2012. The remaining cash was transferred to the City Hall Annex Debt Service Fund. 7 Continuous Problem ? City of Everlasting Sunshine b. Post the entries to the City Hall Annex 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 Everlasting Sunshine has been open for five years; it was created to service an $8,000,000, 6 percent tax-supported bond issue. As of December 31, 2011, this serial bond issue had a balance of $6,000,000. Semiannual interest payments are made on January 1 and July 1, and a principal payment of $400,000 is due on January 1 of each year. As this is a regular serial bond debt service fund, the only accounts with balances as of January 1, 2012, were Cash with Fiscal Agent and Fund Balance?Assigned for Debt Service, each with balances of $580,000. (Revenues were raised and collected in cash in 2011 in order to be able to pay bond principal and interest due on January 1, 2012.) The government chose not to accrue interest payable. Required: a. Open a general journal for the City Hall Debt Service Fund and prepare journal entries for the following transactions. 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 $168,000 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 due 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 payments due on January 1, 2012. 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. 8 Continuous Problem ? City of Everlasting Sunshine 5?C. Part 3. New Debt Service Fund Transactions On the advice of the city attorney, a City Hall Annex Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2012 (see Part 1). Required: a. Open a general journal for the City Hall Annex Debt Service Fund. Record the following transactions, as necessary. Control accounts are not necessary (1) The premium described in transaction 1 of Part 1 was received as a transfer from the capital projects fund. (2) Cash in the amount of $160,000 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 due that day. (4) The transfer described in part c of Part 1 was received. (5) Cash in the amount of $360,000 was received from the General Fund on December 31 and transferred to the fiscal agent to be used for interest and principal payments due on January 1, 2010. The remaining cash on hand was invested. The government elected to not accrue the interest at year-end. b. Post the entries to the City Hall Annex 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 ? Assigned for Debt Service. 5?C. Part 4. Governmental Funds Financial Statements Required: a. Prepare a Balance Sheet for the governmental funds for the City of Everlasting Sunshine as of December 31, 2012. Include the General Fund, the Street and Highway Fund (P4?C), the City Hall Debt Service Fund, and the City Hall Annex Debt Service Fund. Use the balances computed in 4-C for the General Fund and special revenue fund portions of this statement. b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the governmental funds for the City of Everlasting Sunshine for the Year Ended December 31, 2012. Include the same funds as listed in requirement a plus the City Hall Annex Construction Fund. I'v done part 1 to 3, but i'm stuck on how to do the statement and balance sheet.

 

Paper#11777 | Written in 18-Jul-2015

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