Jefferson County established a capital project fund in 2011 to build lowincome housing with the transfer of $100,000 from the General Fund. The following transactions occurred during 2012:

1. April 1, 2012, 6 percent bonds with a face value of $700,000 were issued in the amount of $720,000. The bond premium was transferred to the debt service fund.

2. The County received notice that it had met eligibility requirements for a federal government grant intended to support the capital project in the amount of $250,000. The grant (cash) will be received when the project is completed in February 2013.

3. The County issued a contract for the construction in the amount of $1,000,000.

4. The contractor periodically bills the County for construction completed to date. During the year, bills totaling $390,000 were received. By year-end, a total of $350,000 had been paid.

Jefferson County established a debt service fund in 2012 to make interest and principle payments on the bonds issued in item 1 above. Bond payments are made on October 1 and April 1 of each year. Interest is based on an annual rate of 6 percent and principle payments are $17,500 each.

The following transactions occurred during 2012:

5. The bond premium was received through transfer from the capital project fund.

6. September 30, $38,500 was transferred from the General Fund for the October 1 bond payment.

7. The first debt service payment was made on October 1, 2012.

The Elwood Family Book Fund was established in December 2011, funded by a bequest with the legal restriction that only earnings, and not principal, can be used for the purchase of books for the James K. Polk Library in Jefferson County. The principal amount that must be maintained is $500,000. The following transactions occurred during 2012:

8. The Elwood family pledge of $500,000 was received in donated corporate bonds with a fair value of $370,000 and the balance in cash.

9. $130,000 was invested in U.S. Government Securities.

10. Interest in the amount of $17,000 was received in cash during the year.

11. During the year, books totaling $14,000 were ordered for the library.

12. During the year, the library reported receiving books with an invoice amount totaling $14,000. $13,900 of the amounts due for book purchases had been paid by year-end.

13. An additional $2,500 of interest had accrued on the investments at December 31 and will be received in January of next year.

14. The corporate bonds had a market value of $371,500 and the U.S. securities had a market value of $129,400 as of December 31.

Requirements

Using the Excel template provided (a separate tab is provided for each of the requirements):

a. Prepare journal entries recording the events 1 to 14 for the capital projects, debt service, and permanent funds.

c. Prepare closing entries.

d. Prepare a Statement of Revenues, Expenditures and Changes in Fund Balance for the Governmental Funds (The General Fund financial statements have already been prepared).

e. Prepare a Balance Sheet for the Governmental Funds, assuming that unexpended spendable resources in the capital projects fund are classified as restricted and unexpended spendable resources in the debt service and permanent fund are classified as assigned.

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Capital Project Fund Trial Balance: December 31, 2011 Debits Credits $100,000 Cash Fund Balance $100,000 Permanent Fund Trial Balance: December 31, 2011 Debits Credits Receivable from Grantor $500,000 Nonspendable Fund Balance Library Purchases 5500,000