In fiscal 2013, the City of Allen, Texas plans to issue $100,000,000 face value of 5 percent

Question:

In fiscal 2013, the City of Allen, Texas plans to issue $100,000,000 of 5 percent general obligation bonds to finance the construction of a new state-of-the-art fire station plus equipment. Additional financing will be obtained from a federal grant. A capital projects fund will account for the activities relating to this project, and a debt service fund will account for resources used to make payments on the debt. The general fund will provide the resources to pay the annual interest payments. The following transactions occurred in each of the two years beginning October 1, 2012, and ending September 30, 2014.
Fiscal 2013
1. October 2: A budget was established for the fire station project, as follows:
General obligation bonds.........................................$100,000,000
Federal grant.........................................................200,000,000
2. October 10: The general fund advanced $1,000,000 to cover planning activities.
3. October 15: $950,000 was spent for engineering and architectural work. The amount was not previously encumbered.
4. October 30: The general obligation bonds were issued at a total price of $100,500,000. The bonds mature on October 30,2022, and interest is paid yearly. The bond premium is legally restricted to be used for bond payments, and is accordingly transferred to the debt service fund.
5. November 9: $65,000,000 of the federal grant proceeds was received.
6. December 1: Contracts were signed with several construction and fire equipment companies who will be responsible for various aspects of the project. All contracts provide for a 20 percent retainage. The contracts totaled $285,000,000.
7. May 15: The advance from the general fund was repaid.
8. September 30: Extensive work was done on the fire station during fiscal 2013, and the construction and equipment companies have submitted invoices in the amount of $180,000,000. $120,000,000 in cash has been paid as of year-end.
Fiscal 2014
1. October 2: $5,000,000 was transferred from the general fund to the debt service fund to cover its interest expenditure for the year.
2. October 30: Interest was paid on the bonds.
3. January 12: The remainder of the federal grant was received by the capital projects fund.
4. June 15: Additional invoices totaling $115,000,000 were received, representing the final billings of the contractors. $116,000,000 in cash was paid to contractors.
5. July 25: The fire station was accepted by the city. All contractors were paid in full, and the remaining balance was transferred to the debt service fund to finance future payments on the bonds.
Assume all resources of the capital project fund are restricted. Debt service fund resources are committed. Required
a. Prepare the journal entries, including closing entries, for the capital projects and debt service funds for fiscal 2013 and 2014.
b. Prepare the for the capital projects fund on September 30, 2013.
c. Prepare the for the debt service fund on September 30, 2014. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...