During the year, the city council approved the construction of a new school building at an estimated

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Question:

During the year, the city council approved the construction of a new school building at an estimated cost of $2,750,000. They also authorized the issuance of $2,500,000 in general obligation long-term bonds to finance the cost of construction. Record journal entries for the following transactions for fiscal year 2018 and post them to the general ledger for the School Building Capital Project Fund.

Entry Reference

CP1 $250,000 was received from the General Fund for construction of a new school building (see entry GF9).
(GF9 The city government agreed to provide $250,000 for the school building construction project and $250,000 was transferred to the school building capital project fund.)

CP2 On April 1, 2018, as authorized by the city council, $2,500,000 in 10% general obligation long-term bonds were issued for $2,580,000. The premium of $80,000 was reserved for redemption of the bonds and immediately transferred to the debt service fund. The principle was set aside for construction of the school. The bonds call for annual interest payments on March 31, and mature on April 1, 2038.

CP3 On June 1, the school building contract was awarded to the lowest bidder for $2,600,000, including planning and architect’s fees.

CP4 On November 30, 2018, progress billings of $1,250,000 for the school building were received from the contractor and $850,000 was paid in cash on December 31, 2017. The remaining balance is expected to be paid in January 2018. Liabilities resulting from the capital additions are recorded in “Contracts Payable.”