Question

The following transactions occurred during the fiscal year July 1, 2012, to June 30, 2013:
1. The City of Spainville approved the construction of a city hall complex for a total cost of $ 120,000,000. A few days later, a contract with a 5 percent retainage clause was signed with Paltrow Construction for the complex. The buildings will be financed by a federal grant of $ 25,000,000 and a general obli-gation bond issue of $ 100,000,000. During the current year, investment revenue of $ 4,000,000 is budgeted. (Assume the budget is recorded in the accounts and encumbrance accounting is used.)
2. The bonds were issued for $ 90,000,000 ( the face amount of the bonds was $ 100,000,000). The difference between the actual cost of the project and the bond and grant proceeds was expected to be generated by investing the excess cash during the construction period.
3. The city collected the grant from the government.
4. The city invested $ 90,000,000.
5. The contract signed with Paltrow stipulated that the contract price included architect fees. The architects were paid their fee of $ 45,000 by Spainville. ( Assume a Vouchers payable account is used.)
6. Paltrow submitted a progress billing for $ 25,000,000. The billing, less 5 percent retainage, was approved. Assume that the city will use resources from the federal grant to make this payment.
7. Investments that cost $ 5,000,000 were redeemed for a total of $ 5,020,000.



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  • CreatedDecember 30, 2014
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