Question

Butler County issued $2,000,000 of 9-month, 9% bond anticipation notes to provide financing for construction of a county baseball stadium. This prevented delays in beginning the project, which had been approved at an estimated cost of $4,000,000. December 31 is the end of the county’s fiscal year. The following transactions occurred during 20X8 and 20X9:
1. The bond anticipation notes were issued at par on July 1, 20X8.
2. The county signed a contract on July 1, 20X8, with the King of Swat Construction Company to build the stadium. The contract price was $4,000,000.
3. The King of Swat Construction Company billed the county $1,800,000 during 20X8 for work completed on the project. The county paid the amount billed less a 5% retainage to be remitted upon final approval of the stadium.
4. On February 20, 20X9, the county issued the baseball stadium bonds ($4,000,000 par) at a price of $4,180,000, net of $120,000 bond issue costs.
5. The county repaid the bond anticipation notes and interest upon maturity from the bond proceeds.
6. The King of Swat Construction Company billed Butler County $2,200,000 for work performed in 20X9 to complete the baseball stadium. The project was approved by the county, and the King of Swat Construction Company was paid in full. The remaining assets were transferred to the related Debt Service Fund.

Required
a. Prepare the general journal (budgetary and actual) entries to record the preceding transactions for Butler County. Also, prepare 20X8 and 20X9 financial statements for the county’s Baseball Stadium CPF. Assume that the bond anticipation notes do not qualify as long-term liabilities and that the proceeds of the note and of the bond are limited to use for costs directly related to construction of the baseball stadium.
b. Repeat the requirements in (a) under the assumption that the bond anticipation notes meet the criteria for being treated as general long-term liabilities.



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  • CreatedOctober 25, 2014
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