Chapter 5 Smithvile short version

Chapter 5 Recordlng Capltal Asset Transactions Street Improvement Capital Projects Fund and Govern mental Activities at the Government-wide Level During late 2019, the voters of the City of Smithville authorized taxsupported bond issues totaling $8,000,000 as partial nancing for projects to construct the extension of streets and the relatedcurbs, culverts, and storm sewers in the city. The estimated total cost of the projects, which are expected to extend over the next three years, was $11,200,000. In addition to the bond nancing, voters also approved a special 1 cent sales tax to assist in nancing the projects. The sales tax begins January 1, 2020 and will continue for seven years. The sales tax is projected to generate $550,000 each year. Required a. Prepare general journal entries as necessary to record the transactions described below in the Street Improvement Fund generaljournal and, if applicable, in the governmental activities general journal. Do not record entries at this time in other affected funds; those entries will be made in the later chapters of this cumulative problem that cover the affected funds. Use account titles listed under the dropdown [Account] menu. Be sure the year 2020 is selected from the dropdown [Year] menu and the appropriate paragraph number shown in bold face font below is in the [Description] eld. 1. [Pam 5-a-1] In early 2020, design plans and specications for the rst project, the Elm Street Project, were submitted by a construction engineering rm. The rm billed the Street Improvement Fund for $150,000. Requlred: Record this billing and the related Vouchers Payable liability in the Street Improvement Fund and governmental activities journals. (Note: this transaction was not encumbered.) 2. [Para. 5-8-2] On March 15, 2020, construction bids were opened and analyzed. A bid of $2,400,000 was accepted, and the contract was awarded for the Elm Street Project. The contract provided for a retained percentage of 5 percent from each progress payment, and from the final payment, until nal inspection and acceptance by the city's public works inspectors. Requlred: Record the signing of the contract in the Street Improvement Fund general journal. This transaction has no effect at the govern mentwide level. 3. [Para 5-3-3] On April 1, 2020, 2.5% deferred serial bonds with a face value of $2,000,000 were sold for a total amount of $2,032,500, of which $12,500 was for accrued interest from the January 1, 2020 date of the bonds and $20,000 was a premium on the bonds sold. Cash in the amount of the accrued interest and premium was deposited directly in the Street Improvement Bond Debt Service Fund. Cash in the amount of $2,000,000 was deposited and recorded in the Street Improvement Fund. Required: Record this transaction in the Street Improvement Fund and governmental activitiesjournals. (Hint: In addition to recording the liability for bonds payable in the governmental activitiesjournal, you should record the premium on the bonds payable [credit Premium on Deferred Serial Bonds] and accrued interest on bonds sold [we recommend that you credit Expenses ilnterest on Longrterm Debt] in the governmental activities generaljournal for the $12,500 of accrued interest.) For now you should not make the entry in the Street Improvement Bond Debt Service Fund to record the accrued interest and premium. That entry will be made in Chapter 6 of this cumulative problem. 4. [Para 5-3-4] Vouchers payable (see Transaction 1) were paid on April 20, 2020. Required: Record this transaction in both the Street Improvement Fund and governmental activities generaljournals. 5. [Pam 5-a-5] In July 2020, the contractor for the Elm Street Project reported that the project was onehalf completed and requested a progress payment of $1,200,000. Required: Record the liability for the progress billing in both the Street Improvement Fund and governmental activities general journals. 6. [Farm 5-a-6] The billing for the partially completed Elm Street Project (see Transaction 5) was paid in late July, less the contractual retention of 5 percent. Required: Record this transaction in both the Street Improvement Fund and governmental activities generaljournals. 10. 11. [Para 5-3-7] On December 10. 2020 the Elm Street Project was completed and the contractor for the project requested a final payment of $1,200,000. This amount was recorded as a liability. Required: Record the liability for the nal billing in both the Street Improvement Fund and governmental activitiesjournals. [Para. 5-3-8] During the year sales taxes were collected in the amount of $560300. Required: Make the summaryjournal entries in both the Street Improvement Fund and governmental activities journals to record the collection of sales taxes. [Para 5-a-9] Payment was made for the nal billing on the Elm Street Project. less the retained percentage, on December 1. 2020. Required: Record this transaction in both the Street Improvement Fund and governmental activitiesjournals. [Para 5-8-10] Upon final inspection of the Elm Street Project, the city inspector determined that all work conformed to specications. Retained percentages {Transactions 6 and 7) were paid to the contractor. Required: Record this transaction in both the Street Improvement Fund and governmental activitiesjournals. Total construction expenditures for the Elm Street Project should be capitalized in the Infrastructure account in governmental activities. Verify the accuracy of all your preceding entries in the Street Improvement Fund and governmental activities general journals. then click [Post entries] button of each entity to post the entries to the respective general Iedgers. For the Street Improvement Fund only. prepare yearend closing entries for 2020 and post them to the fund's general ledger. Accounts should be closed to Fund BalanceRestricted. (Note: You must click on the box for [Closing Entry] to checkmark it; "Closing Entry\" checkbox will appear next to the [Add credit] field for the account being closed. Be sure the check mark is present for each account being closed.) Click the [Post entries] button to post the closing entry. Cash remaining in the Street Improvement Fund at yearend is not transferred to the debt service fund since other street improvement projects will be undertaken during the next two years. Closing entries will be made in the governmental activities generaljournal in Chapter 9 of this cumulative problem. Ignore those entries for now. entries for now. b. Export the post-closing trial balance for year 2020 to an Excel worksheet and use Excel to prepare a balance sheet for the Street Improvement Fund as of December 31, 2020. (See Illustration 4-4 in the textbook for an example of an appropriate format of a governmental fund balance sheet.) In addition, save and print the post-closing trial balance from the [Reports] dropdown menu. C. Export the pre-closing trial balance for year 2020 to an Excel worksheet and use Excel to prepare a statement of revenues, expenditures, and changes in fund balance for the Street Improvement Fund for the year ended December 31, 2020. (See Illustration 5-3 in textbook for an example of the format of a capital projects fund statement of revenues, expenditures and changes in fund balance.) Save and print the pre-closing trial balance from the [Reports] dropdown menu. [Note: Retain all required printouts and your financial statements in your cumulative folder until directed by your instructor to submit them, unless your instructor prefers to have computer files submitted electronically, in which case you will need to save a .pdf version of your trial balance.] Before closing the City of Smithville it is recommended that you save a backup copy of your work to another location by clicking on [File] and [Save As] for Windows and Mac. You will click on "Export my Project" if you are using the Chromebook version