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ACCT - Capital Projects Funds and Debt Service Funds Problem




Question;Capital Projects Funds and Debt Service Funds;Fund-based;Governmental-based;1.;On January 1, 2010, approval was obtained to begin construstion of a new city hall. As a result;of this approval, $2,800,000 in 5-year serial bonds,which a face interest rate of 7%, were sold;at 104 (an effective rate of 6%). Principal and interest payments are made semiannually beginning;July 1, 2010.The premium is to be used for debt payments for principal and interest.;January 1, 2010;CPF;GT;DSF;2.;On January 3, 2010, a $2,800,000 contract with GoodBuild Construction was signed for the construction.;January 3, 2010;CPF;GT;3.;On June 30, 2010, a bill for $1,400,000 was received from GoodBuild as a result of one-half of the work on the construction being completed.;June 30, 2010;CPF;GT;CPF;GT;4.;On July 1, 2010, the first debt payment for capital project bond was made.;July 1, 2010;DSF;GT;5.;On July 15, 2010, the bill from GoodBuild was paid, less a 10% retainage to ensure performance.;July 15, 2010;CPF;GT;6.;On October 1, 2010, a bill for $1,400,000 was received from GoodBuild in recognition of the completion of work on the city hall addition;Oct. 1, 2010;CPF;GT;CPF;GT;7.;On November 3, 2010, after approval by the city inspectors, all amounts owed to GoodBuild were paid.;Nov. 3, 2010;CPF;GT;8.;On January 1, 2011, the next payment on the capital project bond was made.;Jan. 1, 2011;DSF;GT;9.;On August 1, 2012, the city entered into a capital lease agreement to purchase new equipment for its road crews. The agreement called for an initial;payment of $12,000, with eight more equil annual payments of $15,000 beginning August 1, 2013. The city's normal cost of borrowing is 8%. The;initial payment was made as agreed and the equipment was purchased. The General Fund handled all activities related to this transaction.;Aug. 1, 2012;GF;GT;10.;On August 1, 2013, the first annual payment is made on the capital lease agreement.;Aug. 1, 2013;DSF;GT;11.;On December 31, 2013, depreciation of $300,000 is recorded as appropriate for all govermental capital assets.;Dec. 31, 2013;DFS;GT


Paper#43842 | Written in 18-Jul-2015

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