Prepare Journal Entries for the Following Related Transactions in the Fund

question 76

Essay

Prepare journal entries for the following related transactions in the fund and activity journals affected:
1.A capital projects fund issued $5,000,000,4 percent bonds for $5,050,000 to finance improvements of a park. Premiums received are to be used to service the debt issue.
2.The Parks and Recreation Special Revenue Fund transferred $250,000 for use in construction.
3.A construction contract was awarded in the amount of $5,200,000.
4. A bill was received from the contractor for $2,600,000.
5. The contractor's bill is paid. 5% retainage is withheld.
6.The park renovations were completed and the final bill of $2,600,000 was received. The contractor's bill and retainages are approved for payment in full.Total construction expenditures were allocated as follows: $5,000,000 to building,and the remainder to equipment.
7.The capital projects fund temporary accounts were closed,and the capital projects fund was closed by transferring remaining funds to the debt service fund for use in debt repayment.

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Definitions:

Estimated Rate

An approximation used to calculate various financial metrics, often used when the exact value is unknown.

Gross Profit

The earnings a company retains after subtracting the expenses related to the production and sale of its goods or the delivery of its services.

Inventory Cost

Inventory cost refers to the total cost associated with acquiring, storing, and managing a company's inventory, including purchase costs, carrying costs, and any spoilage or shrinkage.

Physical Inventory

An actual count of all merchandise or stock on hand at a specific time.