During fiscal year 2022, the voters of the City of Bingham approved the issuance of 2 percent tax-supported serial bonds in the face amount of $2,500,000 to construct a café in the city hall annex. The bonds are to mature in blocks of $125,000 every six months over a 10-year period commencing in 2024.

Required

Prepare general journal entries as necessary to record the following transactions in the general journals of the City Hall Annex Construction Fund and, if applicable, in the governmental activities general journal at the government-wide level. 

[1] On January 3, 2023, the bond issue was sold for $2,516,742. Cash in the face amount of the bonds, $2,500,000, was deposited in the City Hall Annex Construction Fund; the premium was deposited in the debt service fund, as required by state law.

Required: Record these transactions in the City Hall Annex Construction Fund and governmental activities journals. In addition to recording the liability for 2% serial bonds payable in the governmental activities journal, you should record the premium on the bonds payable [credit Premium on Serial Bonds Payable] in the governmental activities general journal. Wait until instructed in Chapter 6 to make the corresponding entry in the debt service fund.

[2] A contract for architectural services was signed at an estimated amount of $240,000 for the design of the cafe.

Required: Record the encumbrance in the City Hall Annex Construction Fund. This transaction has no effect at the government-wide level.

[3] Plans were received (related to the contract signed in paragraph 5-a-2) for which architectural fees of $245,000 were vouchered.

Required: Eliminate the encumbrance and record a Vouchers Payable liability in the City Hall Annex Construction Fund and governmental activities journals, as appropriate.

[4] Construction bids were opened and analyzed. A contract was signed with the firm that submitted the winning bid of $2,200,000. A provision of the contract permits the city to withhold 5 percent of payment pending final acceptance of the completed project.

Required: Record the signing of the contract in the City Hall Annex Construction Fund general journal. This transaction has no effect at the government-wide level.

[5] The contractor submitted a billing for $1,100,000. This amount was recorded as a contract payable.

Required: Record this transaction in both the City Hall Annex Construction Fund and governmental activities general journals.

[6] The contractor’s billing (see para. 5-a-5) was paid, less a 5 percent retained percentage.

Required: Record this transaction in both the City Hall Annex Construction Fund and governmental activities general journals.

[7] The contractor completed construction, submitted the final bill, and requested payment of the balance due. A liability was recorded in the amount of $1,150,000.

Required: Record this transaction in both the City Hall Annex Construction Fund and governmental activities general journals. The encumbrance account should be reduced by the remaining $1,100,000 construction contract balance.

[8] After final inspection, a final payment was made to the contractor, including the amount retained in para. 5-a-6.

Required: Record this transaction in both the City Hall Annex Construction Fund and governmental activities general journals.

[9] The City Hall Annex Construction Fund paid all outstanding liabilities on December 31, 2023.

Required: Record this transaction in both the City Hall Annex Construction Fund and governmental activities general journals. Total construction costs for the City Hall Annex Construction Project should be capitalized in the Buildings account in governmental activities.

[10] Remaining cash in the City Hall Annex Construction Fund was transferred to the debt service fund.

Required: Record this transaction in the City Hall Annex Construction Fund. Do not record the transfer in the debt service fund until you are instructed to do so in Chapter 6. This transaction involves two governmental funds, thus it has no effect on the governmental activities general journal.

Answer rating: 100% (QA)

Here are the journal entries to record the transactions 1 City Hall Annex Construction Fund Dr Cash ... View the full answer