Question

The following information pertains to Palmer Township’s construction and financing of a new administration center:
Estimated total cost of project ... .. . . . .. .. .... .. ... . . .. . . . . .. . . . .. .. .. $9,000,000
Project financing:
State entitlement grant. .. .... .. . . . .. .. .... .. ... . . .. . . . . .. . . . .. .. ... $3,000,000
General obligation bonds assigned to the capital projects fund:
Face amount ... .. . .. .. .. . . . . . .. .... .. .... . .. . . . . .. . . . . . .. ............... $6,000,000
Stated interest rate . . .. .... .. . . ... .. .... .. .. . . . .. . . .. .. . . ... .. .... 6%
Issue date.. .. .. ... .... .. . . .. . .. .... .. .. .. . .. . . . . .. . . .. . .. ................... December 1, 2018
Maturity date ... .. . .. .. .. . . . . . .. .... .. .... . .. . . . . .. . . . . . .. .............. November 30, 2028
Palmer’s fiscal year ended on June 30, 2018. The following events occurred that affected the capital projects fund established to account for this project:
July1, 2018— The capital projects fund was assigned $250,000 from the general fund for preliminary expenses.
July9, 2018— Engineering and planning costs of $200, 000, for which no encumbrance had been recorded, were paid to Krew Associates.
December 1, 2018 — The bonds weresoldat101.Thepremium is transferred to the debt service fund.
December 1, 2018 — The entitlement grant was formally approved by the state.
April 30, 2019 — A $7,000,000 contract was executed with Kimmel Construction Corporation, the general contractor for the major portion of the project. The contract was approved by a subcommittee of the township council. The contract provides that Palmer will withhold 4% of all billing spending at is factory completion of the project.
May9, 2019 — $1,000,000 of the state grant was received.
June 10, 2019 — The $250,000 transferred from the general fund was repaid back to the general fund.
June 30, 2019 — Progress billingof$1,200,000 was received from Kimmel.
Palmer uses encumbrance accounting for budgetary control. Unencumbered appropriations lapse at the end of the year.
Required
1. Prepare journal entries in the administration center capital projects fund to record the fore- going transactions.
2. Prepare the June 30, 2019, closing entries for the Administration Center Capital Projects fund.
3. Prepare the Administration Center Capital Projects Fund balance sheet at June 30, 2019.
4. Prepare entries needed in other funds and groups.


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  • CreatedApril 13, 2015
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