The City of Presho Had the Following Transactions Related to the Construction

question 50

Essay

The City of Presho had the following transactions related to the construction of a new courthouse.
a) 1/2/2017: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due.
b) 3/1/2017: Land is purchased for a new courthouse at a cost of $ 300,000.
c) 3/1/2017: A contract is signed for construction of the new courthouse in the amount of $ 4,300,000.
d) 6/15/2017: Cash $ 225,000sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund.
e) 7/1/2017: Interest $100,000 and principal $125,000) are paid on the courthouse fund serial bonds.
f) 12/1/2017: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000.
g) 12/27/2017: $97,500 is transferred from the General Fund for the 1/1/2017 interest payment due on the courthouse fund serial bonds. Interest is accrued as of 12/31/2017, following the exception permitted by GASB.
Required: Prepare a Statement of Revenues, Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds. Assume this is the first year for each fund beginning fund balances are zero and the City has no other long-term debt than that described above. Use separate columns for the two funds

---

Definitions:

Trading Investments

Securities that a company holds for the purpose of selling them in the short term to profit from price differences.

Valuation Allowance

A reserve established against deferred tax assets that may not be realized, ensuring that the asset's carrying amount does not exceed its likely realization.

Balance Sheet

A document showing a summary of a corporation's assets, liabilities, and equity of its shareholders at a certain moment, offering a glimpse into its financial health.

Income Statement

A document detailing a corporation's income and outgoings within a particular timeframe, concluding with either a profit or a loss.