P7-2 (General Ledger Entries; Statements) The following transactions took place
ID: 2405439 • Letter: P
Question
P7-2 (General Ledger Entries; Statements) The following transactions took place in the town of Burchette during 20X3: 1. A bond issue of $12,000,000 was authorized for the construction of a library, and the estimated bond issue proceeds and related appropriations were recorded in the General Ledger accounts of a new Capital Projects Fund. 2. The bonds were sold at a premium of $90,000. 3. The cost of issuing the bonds, $80,000, was paid. 4. An order was placed for materials estimated to cost $6,500,000. 5. Salaries and wages of $500,000 were paid. 6. The premium, net of bond issuance costs, was transferred to a Debt Service Fund. The following transactions took place during 20X4: 7. The materials were received; the actual cost was $6,585,000. 8. Salaries and wages of $4,010,000 were paid. 9. All outstanding bills were paid. 10. The project was completed. The accounts were closed, and the remaining balance was transferred to a Debt Service Fund. Required a.Prepare all journal entries (budgetary and actual), including closing entries, to record the Capital Projects Fund transactions for 20X3 and 20X4. b.Prepare a Capital Projects Fund balance sheet as of December 31, 20X3. c.Prepare a Capital Projects Fund Statement of Revenues, Expenditures, and Changes in Fund Balance for the project, including (1) the year ended December 31, 20X3, and (2) a separate budgetary combined comparison statement for the years ended December 31, 20X3 and 20X4. I don't understand what the closing entries should be.
Explanation / Answer
A:
B:
C1:
C2:
Village of Burchette Capital Projects Fund General Journal 20X3 1 Estimated Bond Issue Proceeds 12,000,000 Appropriations 12,000,000 (To record estimated bond issue proceeds and appropriations) 2 Cash 12,090,000 Other Financing Sources - Bonds 12,000,000 Other Financing Sources - Bond Premium 90,000 (To record the sale of bonds at a premium) 3 Expenditures - Bond Issue Costs 80,000 Cash 80,000 (To record the bond issue expenses) 4 Encumbrances - Materials 6,500,000 Encumbrances Outstanding 6,500,000 (To record encumbrances for materials on order) 5 Expenditures - Salaries & Wages 500,000 Cash 500,000 (To record salaries and wages paid) 6 Other Financing Uses - Transfer to Debt Service Fund 10,000 Debt Service Fund 10,000 (To record transfer of bond premium, net issue costs, to Debt Service Fund) C1 Other Financing Sources - Bonds 12,000,000 Other Financing Sources - Bond Premium 90,000 Unreserved Fund Balance 90,000 Estimated Bond Issue Proceeds 12,000,000 (To close bond issue proceeds account) C2 Appropriations 500,000 Fund Balance 90,000 Other Financing Uses - Transfer to Debt Service Fund 10,000 Expenditures 580,000 (To close expenditures and operating transfer accounts at year end) C3 Appropriations 6,500,000 Encumbrances - Materials 6,500,000 (To close encumbrances at year end) Appropriations 5,000,000 Fund Balance 5,000,000 (To close the budgetary account for appropriations) Fund Balance 5,000,000 Appropriated, Unencumbered Fund Balance 5,000,000 (To reduce fund balance for amounts required to cover outstanding appropriations) Village of Burchette Capital Projects Fund General Journal 20X4 20X4 Reversing Entry Encumbrances 6,500,000 Appropriations 6,500,000 (To reverse encumbrances closing entry made at the end of 20X3) 7 Encumbrances Outstanding 6,500,000 Expenditures - Materials 6,585,000 Encumbrance 6,500,000 Voucher Payable 6,585,000 (To reverse entry setting up encumbrances and to record expenditure for materials) 8 Expenditures - Salaries & Wages 4,010,000 Cash 4,010,000 (To record salaries and wages paid) 9 Voucher Payable 6,585,000 Cash 6,585,000 (To record payment of outstanding bills) 10 Other Financing Uses - Transfer to Debt Service Fund 905,000 Debt Service Fund 905,000 (To transfer balance to Debt Service Fund) C1 Appropriations 11,500,000 Expenditures 10,595,000 Fund Balance 905,000 (To close expenditures) C2 Fund Balance 905,000 Other Financing Uses - Transfer to Debt Service Fund 905,000 (To close transfer account and terminate Capital Projects Fund)Related Questions
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