The Wickliffe City Council authorizes the restorationof the city library. The project is to be funded by the issuance ofbonds, a reimbursement grant from the state, and propertytaxes.
1. Prepare journal entries in the capital projects fund to reflectthe following events and transactions:
a. The city approves (and gives accounting recognitionto) the projects budget of $9,027,000, of which $6,000,000 is to befunded by general obligation bonds, $2,500,000 from the state, andthe remaining $527,000 from the general fund. The city estimatesthat construction costs will be $8,907,000 and bond issue costs$120,000.
b. The city issues 9 percent, 15-year bonds that havea face value of $6,000,000. The bonds are sold for $6,120,000, anamount reflecting a price of $102. The city incurs $115,000 inissue costs; hence, the net proceeds are $6,005,000.
c. The city transfers the net premium of $5,000 to itsdebt service fund.
d. It receives the anticipated $2,500,000 from thestate and transfers $527,000 from the general fund.
e. It signs an agreement with a contractor for$8,890,000.
f. It pays the contractor $8,890,000 upon completionof the project.
g. It transfers the remaining cash to the debt servicefund.
2. Prepare appropriate closing entries.
The Wickliffe City Council authorizes the restorationof the city library. The project is to be funded by the issuance ofbonds, a reimbursement grant from the state, and propertytaxes.
1. Prepare journal entries in the capital projects fund to reflectthe following events and transactions:
a. The city approves (and gives accounting recognitionto) the projects budget of $9,027,000, of which $6,000,000 is to befunded by general obligation bonds, $2,500,000 from the state, andthe remaining $527,000 from the general fund. The city estimatesthat construction costs will be $8,907,000 and bond issue costs$120,000.
b. The city issues 9 percent, 15-year bonds that havea face value of $6,000,000. The bonds are sold for $6,120,000, anamount reflecting a price of $102. The city incurs $115,000 inissue costs; hence, the net proceeds are $6,005,000.
c. The city transfers the net premium of $5,000 to itsdebt service fund.
d. It receives the anticipated $2,500,000 from thestate and transfers $527,000 from the general fund.
e. It signs an agreement with a contractor for$8,890,000.
f. It pays the contractor $8,890,000 upon completionof the project.
g. It transfers the remaining cash to the debt servicefund.
2. Prepare appropriate closing entries.
