Pinehurst County established a capital projects fund at the beginning of 2021 to construct a courthouse. The
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Question:
Pinehurst County established a capital projects fund at the beginning of 2021 to construct a courthouse. The estimated cost of the courthouse was $3,530,000. Construction will be financed in the following manner:
- Grant from the State $ 500,000
- Issuance of general obligation (G.O.) serial bonds 3,000,000
- Estimated revenue from interest on treasury bills 30,000
The following events occurred during the year ended December 31, 2021:
- County trustees approved the capital budget for the courthouse on January 5, 2021.
- The referendum to issue $3,000,000 of general obligation bonds received voter approval in November, 2020. The bonds were issued for $3,060,000 on January 31. The County trustees authorized the transfer of the premium to a debt service fund. The transfer was made in February.
- In early February, the architectural firm of Hudson and Judson was selected to draw the plans for the courthouse for a fee of $25,000. Plans were submitted in March, and the architectural firm was paid $25,000 in April.
- $2,500,000 of the bond proceeds was invested in short-term treasury bills in April, 2021.
- Pinehurst County signed a contract with Gleeson Construction for $3,420,000 in June, 2021.
It was estimated that it will take 12 months to complete construction of the courthouse.
- In November, 2021, Pinehurst County received a bill from Gleeson Construction for
$1,200,000. The County estimated that the courthouse was 35% complete.
- Pinehurst received the $500,000 grant from the State in December, 2021.
- $1,300,000 of treasury bills matured in December, 2021; interest income on the matured securities amounted to $15,000.
- On December 30, 2021. Gleeson was paid the amount billed less a retainage of 10%.
- Accrued interest income on the $1,200,000 of treasury bills held on December 31, 2021, amounted to $14,000. The interest will be received when the treasury bills mature in February, 2022. This interest is available to pay for expenditures incurred in 2021.
Required:
- Prepare, in good form, the statement of revenues, expenditures, and changes in fund balance for the courthouse capital projects fund for the year ended December 31, 2021.
- Answer the following questions that pertain to the balance sheet of the courthouse capital projects fund at December 31, 2021:
- What is the amount reported for cash?
- What is the total amount reported for assets?
- What is the total amount reported for liabilities?
- What is the level of constraint reported for fund balance?
- In the notes to the financial statements, how will the construction expenditures be reported in the capital asset note (hint: listen to my VT dealing with CAFR disclosures for capital assets)?
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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