Question

Kindly assist me with the below problem

ZEE Township entered into the following transactions during 20X4.

Prepare the journal entries required in the Capital Projects Fund to account for

the below transactions.

1. The township authorized a bond issue of $11 million for the construction of a

    pedestrian walkway as part of a downtown revitalization project. An additional

   $2 million of general revenues is to be used for the project. The authorization was

   recorded in the appropriate fund.

2. Two million dollars of general revenues were paid to the construction fund from the

    General Fund.

3. The bonds were issued at 110. The premium was transferred to the fund from which

     the debt is to be serviced.                                                 

4. The township entered into a contract with Copfer Construction Company for

   construction of the walkway at an estimated cost of $10,350,000.

5. An engineering design firm was paid $174,000 for design work on the project.

6. A bill for $4,200,000 was received from Copfer Construction Company for work   

completed on the walkway to date. All but a 5% retainage was paid.

7. The accounts were closed at year end.

Answer 1

The following are the Journal entries in the Capital Project fund :

S.NO.	Particulars	Debit ( in $ )	Credit (in $ )
1	Cash a/c To Bonds Payable a/c ( The township issued bonds at value)	11,000,000	11,000,000
2	Accounts receivable a/c To Sales revenues a/c ( General revenues is used for the project)	2,000,000	2,000,000
3	Construction fund a/c To General revenues a/c ( General revenues were paid to the construction fund)	2,000,000	2,000,000
4	Contract expenses a/c To cash a/c ( Contract expenses paid )	10,350,000	10,35,000
5	Design expenses a/c   To cash a/c   ( Design Expenses paid )	1,74,000	1,74,000
6	Cash a/c   To Copfter construction company a/c ( Bill received from the copfter construction company )	42,00,000	42,00,000
7	Retainage Payable a/c   To cash a/c ( 5% of Retainge paid )	2,10,000	2,10,000