The Leslie City sold bonds in the amount of$5,000,000 to finance the constructio

Question

The Leslie City sold bonds in the amount of$5,000,000 to finance the construction of a

public health center. The bonds are serial bonds and were sold at par on July 1, 2005 the first day of a fiscal year. Shortly thereafter a construction contract in the amount of $4,500,000 was signed and the contractor commenced work. By year-end the contractor had been paid in full for all billings to date amounting to $2,000,000.

Required:

Prepare in general journal form all journal entries that should have been made during the fiscal year ended June 30, 2006 to record the above information in the capital projects fund (including closing entry).

Explanation / Answer

Cash – Capital Projects Fund - Debit        $5,000,000

                To Bonds payable - Credit                            $5,000,000

(being bonds issued to finance the construction)

Construction in process - Debit                 $2,000,000

                To Payable to contractor - Credit               $2,000,000

(being record cost of billings for the year)

Payable to contractor - Debit      $2,000,000

                To Cash – Capital Projects Fund - Credit $2,000,000          

(being cash paid to contractor for billings)

Construction in process - Debit                 $2,500,000

                To Payable to contractor - Credit               $2,500,000

(being record closing entry for the construction cost of payable to contractor)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.