Reference no: EM131703950
Question: (Review problem-journal entries for several funds and statement of revenues, expenditures, and changes in fund balance for a Capital Projects Fund)
The City of Lexington had the following transactions during the calendar year 2013. The transactions relate to financing and constructing a new firehouse. Lexington uses budgetary accounting in its Capital Projects Fund. Prepare journal entries to record all the transactions, and identify the fund(s) used. Also, prepare a statement of revenues, expenditures, and changes in fund balance for Lexington's Capital Projects Fund for the year ended December 31, 2013.
1. Lexington adopted a budget for the Capital Projects Fund on January 1, based on the following assumptions: Bonds would be issued for $2,000,000. Lexington would transfer $300,000 from its General Fund, and the state would contribute $200,000. Contracts would be awarded for $2,500,000 million.
2. On February 1, Lexington issued $2,000,000 of 5 percent general obligation bonds to build a new firehouse. Principal and interest payments are to be made each February 1 and August 1 for 20 years, starting August 1, 2013. Principal is amortized in equal semiannual payments of $50,000. The bonds were sold for $2,030,000.
3. On February 1, Lexington contracted with Howard Consultants for $100,000 to supervise construction.
4. On February 1, the Capital Projects Fund invested $1,000,000 in a CD.
5. On February 1, Lexington entered into a contract with Eddie Construction to build the firehouse for $2,400,000.
6. The CD matured on June 1. Lexington recorded the check for $1,010,000, which included $10,000 of interest, in the Capital Projects Fund.
7. Lexington transferred $300,000 from its General Fund to the Capital Projects Fund to help pay for construction of the firehouse.
8. Eddie Construction completed work on June 30. It billed Lexington $2,400,000. Lexington paid the bill less 10 percent retainage, pending final inspection of Eddie's work by Howard Consultants.
9. On July 10, Howard Consultants advised Lexington that Eddie had completed all work to its satisfaction. Lexington advised the state that work on the firehouse was completed. The state promptly wired its contribution of $200,000 to Lexington.
10. On July 15, Lexington paid the retainage to Eddie and also paid Howard the full $100,000 due on its contract. 11. On July 20, all cash remaining in the Capital Projects Fund was transferred to the Debt Service Fund to help defray the principal and interest payment due in August.
12. On July 31, the General Fund transferred to the Debt Service Fund the balance needed to pay the August installment of debt service.
13. On August 1, the Debt Service Fund paid the first installment of debt service on the bonds issued to build the firehouse.