Question

In Fulbright County, the Culture and Recreation Department constructed a library in one of the county’s high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the current fiscal year. The county operates on a calendar-year basis.

Required
Prepare a journal entry for capital projects fund and governmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Transaction Fund / Governmental Activties General Journal Debit Credit 1. The county issued $6,000,000 of 4 percent bonds, with interest payable semiannually on January 1 and July 1. The bonds sold for 101 on February 1. Proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue. Assume the premium and interest are recorded directly in the debt service fund. 1 Capital Projects Fund Governmental Activities 2. A $650,000 federal grant was received to help finance construction of the library. 2 Capital Projects Fund Governmental Activities 3. The Library Special Revenue Fund transferred $250,000 for use in construction of the library. 3 Capital Projects Fund Governmental Activities 4. A construction contract was awarded in the amount of $6,800,000. 4 Capital Projects Fund Governmental Activities 5. The library was completed four months ahead of schedule. Total construction expenditures for the library amounted to $6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, $6,295,000 to building, and the remainder to equipment. 5a Capital Projects Fund Record the completion of construction of the library. 5b Record the payment upon completion of capital project. 5c Governmental Activities Record the completion of construction of the library. 5d Record the capitalization of each item. 6. The capital projects fund temporary accounts were closed to Fund Balance—Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment. 6a Capital Projects Fund Close the temporary accounts to Fund Balance—Restricted. 6b Record the transfer to the debt service fund. 6c Close the remaining temporary account to Fund Balance-Restricted. 6d Governmental Activities

Answer 1

Below is the table showing Journal entries: -

Journal Entry
Transaction	Fund/ Governmental Activities	General Journal	Debit	Credit
1	Capital Projects Fund	Cash	6,000,000
		Other Financing sources - Proceeds of Bonds		6,000,000
	Governmental Activities	Cash	6,080,000
		Bonds Payable		6,000,000
		Premium on Bonds Payable		60,000
		Interest Payable		20,000
2	Capital Projects Fund	Cash	650,000
		Revenues		650,000
	Governmental Activities	Cash	650,000
		Program Revenues-Culture and recreation- Capital Grants and Contributions		650,000
3	Capital Projects Fund	Cash	250,000
		Other Financing Sources-Interfund Transfers in		250,000
	Governmental Activities	No Journal Entry Required
4	Capital Projects Fund	Encumbrances	6,800,000
		Encumbrances Outstanding		6,800,000
	Governmental Activities	No Journal Entry Required
5a	Capital Projects Fund	Encumbrances Outstanding	6,800,000
		Encumbrances		6,800,000
(to record the completion of Construction of Library)
5b		Construction Expenditures	6,890,000
		Cash		6,890,000
(to record the payment upon completion of Capital Project)
5c	Governmental Activities	Construction WIP	6,890,000
		Cash		6,890,000
(to record the completion of Construction of Library)
5d		Land	200,000
		Buildings	6,295,000
		Machinery and Equipment	395,000
		Construction WIP		6,890,000
(to record the capitalization of each item)
6a	Capital Projects Fund	Other Financing Sources - Proceeds of Bonds	6,000,000
		Other Financing Sources - Interfund Transfers in	250,000
		Revenues	650,000
		Construction Expenditures		6,890,000
		Fund Balance Restricted		10,000
(to close the temporary accounts to fund balance - Restricted)
6b		Interfund Transfers Out	10,000
		Cash		10,000
(to Record the transfer to the debt service fund)
6c		Fund Balance - Restricted	10,000
		Interfund Transfers Out		10,000
(to close the remaining account to fund balance - Restricted)
6d	Governmental Activities	No Journal Entry Required