Chapter 5 Case Study

Required:Book journal entries for the following transactions in both the Capital Projects Fund ledger and Government-Wide/Governmental Activities ledger.

Background: The Town of Susanville voters approved a measure to add an extension to the local fire station expected to cost $2,520,000. To pay for this project, the town council authorized an issue of $2,320,000 of 5% bonds as partial financing of the fire station extension, and the $200,000 additional financing will be contributed by the state government.

1.Purchase orders were signed and issued for supplies, materials, minor equipment, and labor required for the project to be performed by the town's employees amounting to $500,000.

Capital Projects Fund:

Cash

Other Financing Resources - Project Bonds

Funds

Governmental Activities:

Investment 500000

Cash 500000

2. A contract, in the amount of $1,925,000 was signed for certain work to be done by a private contractor.

Capital Projects Fund:

Construction Expenditures

Cash

Governmental Activities:

Construction Expenditures

Vouchers Payable

3. Special engineering and miscellaneous costs that had not been encumbered were paid in the amount of $75,000. These costs are deemed to be properly capitalized as part of the fire station.

General Fund:

Other Financing Uses 75000

Vouchers Payable 75000

Governmental Activities:

4. The Town of Susanville received a progress billing from a contractor for work completed in the amount of $970,000. This contract had been encumbered for at the inception of the contract.

General Fund:

Governmental Activities:

5. Payment in full ($200,000) was received from the state government that had agreed to pay part of the cost of the new fire station.

General Fund:

Governmental Activities: