The City of Cowling decides to construct a new library, which it estimates will cost $8...

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The City of Cowling decides to construct a new library, which it estimates will cost $8 million. The City will finance the library with a state construction grant of $2.5 million; a general obligation bond issuance of $5 million; and a transfer from the General Fund of $500,000. Prepare journal entries to record the following transactions in the Capital Projects Fund. No budgetary entries other than encumbrances should be recorded. 1. The General Fund transfers $500,000 to the Capital Projects Fund. 2. The bonds are issued at face value of $5 million. 3. The City signs a contract with the lowest bidder, Pert Construction, to build the library at a cost of $7.7 million. 4. The state pays the City $2.5 million for the construction grant. The City has met all eligibility requirements for the grant. 5. The construction is complete and the City receives a bill from Pert Construction for $7.8 million. The City agrees to the $100,000 increase in the cost of the project. A provision of the contract states that the city will hold 10 percent retainage until the project is inspected and approved. 6. The City pays the amount owed to the contractor less the retainage. 7. The City inspector approves the construction project and the contractor is paid the retainage. 8. The City transfers the remaining cash in the Capital Projects Fund to the fund that will service the payment of the debt. The City of Cowling decides to construct a new library, which it estimates will cost $8 million. The City will finance the library with a state construction grant of $2.5 million; a general obligation bond issuance of $5 million; and a transfer from the General Fund of $500,000. Prepare journal entries to record the following transactions in the Capital Projects Fund. No budgetary entries other than encumbrances should be recorded. 1. The General Fund transfers $500,000 to the Capital Projects Fund. 2. The bonds are issued at face value of $5 million. 3. The City signs a contract with the lowest bidder, Pert Construction, to build the library at a cost of $7.7 million. 4. The state pays the City $2.5 million for the construction grant. The City has met all eligibility requirements for the grant. 5. The construction is complete and the City receives a bill from Pert Construction for $7.8 million. The City agrees to the $100,000 increase in the cost of the project. A provision of the contract states that the city will hold 10 percent retainage until the project is inspected and approved. 6. The City pays the amount owed to the contractor less the retainage. 7. The City inspector approves the construction project and the contractor is paid the retainage. 8. The City transfers the remaining cash in the Capital Projects Fund to the fund that will service the payment of the debt.

Answer rating: 100% (QA)

solution Date Particulars Amount Amount 1 Capitals Project Fund Dr 500000 To General Fund 500000 bei... View the full answer