5. [Para. 5-b-5] Vouchers payable accumulated to date were paid on April 10, 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 6. [Para. 5-b-6] On April 15, 2014, construction bids were opened and analyzed. A bid of $2,000,000 was accepted, and the contract was awarded for the Elm Street Project. The contract provided for a retained percentage of 4 percent from each progress payment, and from the final payment, until final inspection and acceptance by the city?s public works inspectors. Required: Record the signing of the contract in the Street Improvement Fund general journal. This transaction has no effect at the government-wide level. 5. [Para. 5-b-7] On May 6, 2014, 4% deferred serial bonds with a face value of $2,000,000 were sold for a total amount of $2,068,000, of which $28,000 was for accrued interest from the January 1, 2014, date of the bonds and $40,000 was a premium on the bonds sold. Cash in the amount of the accrued interest and premium was deposited directly in the Street Improvement Bond Debt Service Fund. Cash in the amount of $2,000,000 was deposited and recorded in the Street Improvement Fund. The city invested $1,000,000 of the bond proceeds in certificates of deposit maturing in six months and earning 3% per annum. Required: Record these transactions in the Street Improvement Fund and governmental activities journals. (Hint: In addition to recording the liability for bonds payable in the governmental activities journal, you should record the premium on the bonds payable [credit Premium on 4% Deferred Serial Bonds] and accrued interest on bonds sold [we recommend that you credit Expense?Interest on Long-term Debt] in the governmental activities general journal for the $28,000 of accrued interest.) For now you should ignore the entries in the Street Improvement Bond Debt Service Fund to record the accrued interest and premium. Those entries will be made in Chapter 6 of this cumulative problem. 8. [Para. 5-b-8] The city repaid the $50,000 tax anticipation note plus interest of $375 ($50,000 X .03 X 90/360) (See transaction 2). Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. The $375 of interest should be debited to Interest Expenditures in the Street Improvement Fund journal and to Expenses?General Government in the governmental activities journal.

Chapter 5 Smithville Hints 3. Encumbrances XXX Encumbrance Outstanding XXX Encumbrance Outstanding XXX Encumbrances XXX Construction Expenditure XXX VP XXX 4. Cash XXX Revenue - Sales Taxes XXX 7. (Capital project fund) Cash XXX OFS XXX Investments XXX Cash XXX (GW) Cash XXX B/P Premium on B/P Interest expense 9. Encumbrance Outstanding Encumbrances Construction Expenditure Contracts Payable XXX XXX XXX XXX XXX XXX Contracts Payable XXX Contracts Payable-Retained % Cash 11. Encumbrances XXX Encumbrances-Outstanding XXX Encumbrances-Outstanding XXX Encumbrances XXX Construction Expenditure XXX VP XXX XXX XXX XXX 13. Encumbrances XXX Encumbrance Outstanding 14. Cash XXX XXX Investment Revenue-Investment Earnings XXX XXX 15. NO CONTRACTS PAYABLE HERE V/P XXX Judgments Payable XXX Interest Expenditure XXX Cash XXX 16. REMOVE FULL REMAINING ENCUMBRANCE BALANCE (since it said contractor requested FINAL PAYMENT) Reserve for encumbrances XXX Encumbrances XXX Construction Expenditure XXX Contracts Payable XXX Contracts Payable XXX Contracts Payable-Retained % XXX Cash XXX 17. Cash XXX Revenues - Sales Tax XXX Investments XXX Cash XXX (GW) Cash XXX General Revenues - Sales Tax XXX Investments XXX Cash XXX 18. (GW) Infrastructure XXX Construction in Progress XXX Journal General General General GW GW GW General General General General General General General General GW GW GW GW GW GW GW GW GW GW General General General GW GW GW General General General General GW GW GW GW GW GW GW GW General General General GW GW GW GW GW GW GW General General General General GW GW GW GW GW GW GW General General GW GW General General General General General General GW Account Name Taxes Receivable- Current Revenues Estimated Uncollectible Current Taxes Taxes Receivable- Current General Revenues- Taxes- Real Property Estimated Uncollectible Current Taxes Encumbrances Encumbrances Outstanding Cash Taxes Receivable- Current Taxes Receivable- Delinquent Interest and Penalties Receivable on Taxes Due From State Government Revenues Cash Taxes Receivable- Current Taxes Receivable- Delinquent Interest and Penalties Receivable on Taxes Due From State Government General Revenues- Taxes- Sales Program Revenues- General Government- Charges for Services Program Revenues- Public Safety- Operating Grants and Contributions Program Revenues- Culture and Recreation- Charges for Services General Revenues-~1iscellaneous Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Revenues Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties General Revenues- Interest and Penalties on Taxes Expenditures Due to Federal Government Due to State Government Cash Expenses- Public Safety Expenses- Public Works Expenses- General Government Expenses-Health and Welfare Expenses- Culture and Recreation Due to Federal Government Due to State Government Cash Expenditures Due to Federal Government Due to State Government Expenses- Public Safety Expenses- Public Works Expenses- General Government Expenses-Health and Welfare Expenses- Culture and Recreation Due to Federal Government Due to State Government Expenditures Encumbrances Outstanding Encumbrances Vouchers Payable Expenses-Health and Welfare Expenses- Public Safety Expenses- Public Works Expenses- General Government Expenses- Culture and Recreation Equipment Vouchers Payable Due From State Government Revenues Due From State Government Program Revenues- Public Safety- Operating Grants and Contributions Due to Federal Government Vouchers Payable Tax Anticipation Notes Payable Due to State Government Expenditures Cash Due to Federal Government Control Account Year Problem 1020 2014 4-a-01 4010 2014 4-a-01 1021 2014 4-a-01 1020 2014 4-a-01 4660 2014 4-a-01 1021 2014 4-a-01 7010 2014 4-a-02 2600 2014 4-a-02 1010 2014 4-a-03 1020 2014 4-a-03 1030 2014 4-a-03 1040 2014 4-a-03 1060 2014 4-a-03 4010 2014 4-a-03 1010 2014 4-a-03 1020 2014 4-a-03 1030 2014 4-a-03 1040 2014 4-a-03 1060 2014 4-a-03 4670 2014 4-a-03 4600 2014 4-a-03 4650 2014 4-a-03 4640 2014 4-a-03 4710 2014 4-a-03 1040 2014 4-a-04 1041 2014 4-a-04 4010 2014 4-a-04 1040 2014 4-a-04 1041 2014 4-a-04 4690 2014 4-a-04 6010 2014 4-a-05 2040 2014 4-a-05 2050 2014 4-a-05 1010 2014 4-a-05 6610 2014 4-a-05 6620 2014 4-a-05 6600 2014 4-a-05 6630 2014 4-a-05 6640 2014 4-a-05 2040 2014 4-a-05 2050 2014 4-a-05 1010 2014 4-a-05 6010 2014 4-a-06 2040 2014 4-a-06 2050 2014 4-a-06 6610 2014 4-a-06 6620 2014 4-a-06 6600 2014 4-a-06 6630 2014 4-a-06 6640 2014 4-a-06 2040 2014 4-a-06 2050 2014 4-a-06 6010 2014 4-a-07 2600 2014 4-a-07 7010 2014 4-a-07 2010 2014 4-a-07 6630 2014 4-a-07 6610 2014 4-a-07 6620 2014 4-a-07 6600 2014 4-a-07 6640 2014 4-a-07 1280 2014 4-a-07 2010 2014 4-a-07 1060 2014 4-a-08 4010 2014 4-a-08 1060 2014 4-a-08 4650 2014 4-a-08 2040 2014 4-a-09 2010 2014 4-a-09 2020 2014 4-a-09 2050 2014 4-a-09 6010 2014 4-a-09 1010 2014 4-a-09 2040 2014 4-a-09 Debit X Credit X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X GW GW GW GW GW General General General General GW GW GW GW General General General General General General GW GW GW General General General GW GW GW General General General General GW GW GW GW General General GW GW General General General General GW GW General General General General General General General General General General General General Vouchers Payable Tax Anticipation Notes Payable Due to State Government Expenses- General Government Cash Taxes Receivable- Delinquent Estimated Uncollectible Current Taxes Taxes Receivable- Current Estimated Uncollectible Delinquent Taxes Taxes Receivable- Delinquent Estimated Uncollectible Current Taxes Taxes Receivable- Current Estimated Uncollectible Delinquent Taxes Budgetary Fund Balance Estimated Revenues Appropriations Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties Revenues Interest and Penalties Receivable on Taxes Estimated Uncollectible Interest and Penalties General Revenues- Interest and Penalties on Taxes Expenditures Cash Due to Other Funds Expenses- General Government Cash Internal Payables to Business- Type Activities Estimated Uncollectible Delinquent Taxes Estimated Uncollectible Interest and Penalties Taxes Receivable- Delinquent Interest and Penalties Receivable on Taxes Estimated Uncollectible Delinquent Taxes Estimated Uncollectible Interest and Penalties Taxes Receivable- Delinquent Interest and Penalties Receivable on Taxes Due From Other Funds Expenditures Internal Receivables from Business- Type Activities Expenses- General Government Interfund Loans Receivable- Current Cash Inventory of Supplies Fund Balance- Nonspendable- Inventory of Supplies Inventory of Supplies Expenses- Public Works Appropriations Budgetary Fund Balance Estimated Revenues Revenues Expenditures Fund Balance- Unassigned Encumbrances Outstanding Encumbrances Fund Balance- Committed- Public Works Fund Balance- Restricted- Public Saftey Fund Balance- Assigned- Culture and Recreation Fund Balance- Unassigned 2010 2020 2050 6600 1010 1030 1021 1020 1031 1030 1021 1020 1031 2560 3010 5010 1040 1041 4010 1040 1041 4690 6010 1010 2030 6600 1010 2420 1031 1041 1030 1040 1031 1041 1030 1040 1050 6010 1095 6600 1070 1010 1080 2510 1100 6620 5010 2560 3010 4010 6010 2550 2600 7010 2532 2521 2544 2550 2014 4-a-09 2014 4-a-09 2014 4-a-09 2014 4-a-09 2014 4-a-09 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-10 2014 4-a-11 2014 4-a-11 2014 4-a-11 2014 4-a-12 2014 4-a-12 2014 4-a-12 2014 4-a-12 2014 4-a-12 2014 4-a-12 2014 4-a-13 2014 4-a-13 2014 4-a-13 2014 4-a-13 2014 4-a-13 2014 4-a-13 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-14 2014 4-a-15 2014 4-a-15 2014 4-a-15 2014 4-a-15 2014 4-a-16 2014 4-a-16 2014 4-a-17 2014 4-a-17 2014 4-a-17 2014 4-a-17 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry 2014 4-Closing Entry X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Chapter 5 Recording Capital Asset Transactions Street Improvement Capital Projects Fund and Governmental Activities at the Government-wide Level During late 2013, the voters of the City of Smithville authorized tax-supported bond issues totaling $10,000,000 as partial financing for a series of projects to construct streets, curbs, culverts, and storm sewers in various parts of the city. The estimated total cost of the series of projects, which are expected to extend over the next three years, was $11,200,000. In addition to the bond financing, voters also approved a special cent sales tax to assist in financing the projects. The sales tax begins January 1, 2014 and will continue for three years. The sales tax is projected to generate $400,000 each year. Required a. Open a general journal for the Street Improvement Fund by recording the transactions listed under paragraph b below, as necessary. Use account titles listed under the drop-down [Account (# - Description)] menu. Select 2014 for each transaction in the [Year] box of the [Journal] view. Enter the paragraph reference, i.e. 5-b-[1, 2, 3, etc], in the [Transaction Description] box. The following account titles should appear in the [Accounts] view: Cash Investments Taxes ReceivableSales Interest Receivable on Investments Vouchers Payable Judgments Payable Contracts Payable Contracts PayableRetained Percentage Fund BalanceRestricted Encumbrances OutstandingElm Street Project Encumbrances OutstandingSpruce Street Project Revenues Other Financing SourcesProceeds of Bonds Construction ExpendituresElm Street Project Construction ExpendituresSpruce Street Project Interest ExpendituresSpruce Street Project Other Financing UsesInterfund Transfers Out EncumbrancesElm Street Project EncumbrancesSpruce Street Project Please remember that before closing the City of Smithville, you must click on [File], and [Save/Save As] to save your work. Your work is NOT automatically saved. b. Record journal entries in the general journal of the Street Improvement Fund, as appropriate, for each of the following transactions. Remember to enter the correct year and paragraph numbers. Do not record entries at this time in other affected funds; those entries will be made in the later chapters of this cumulative problem that cover the affected funds. You should, however, make all required entries in the governmental activities general journal at the government-wide level. 1. [Para. 5-b-1] In early 2014, design plans and specifications for the first project, the \"Elm Street Project,\" were submitted by a construction engineering firm. The firm billed the Street Improvement Fund for $40,000. Required: Record this billing and the related Vouchers Payable liability in the Street Improvement Fund and governmental activities journals. (Note: this transaction was not encumbered.) 2. [Para. 5-b-2] On March 1, 2014, the city signed a $50,000, 90-day tax anticipation note bearing interest of 3 percent per annum. Required: Record this transaction in the Street Improvement Fund and governmental activities journals. 3. [Para. 5-b-3] A $290 purchase order for advertisements soliciting bids for the Elm Street Project was issued during March 2014. The bill for advertising in the amount of $300 was received and a voucher for payment was issued. Required: Record the encumbrance, billing, and the Vouchers Payable liability in the Street Improvement Fund and governmental activities journals, as appropriate. 4. [Para. 5-b-4] Sales tax revenue of $105,000 was received from the state government and recorded for the first quarter of 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 5. [Para. 5-b-5] Vouchers payable accumulated to date were paid on April 10, 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 6. [Para. 5-b-6] On April 15, 2014, construction bids were opened and analyzed. A bid of $2,000,000 was accepted, and the contract was awarded for the Elm Street Project. The contract provided for a retained percentage of 4 percent from each progress payment, and from the final payment, until final inspection and acceptance by the city's public works inspectors. Required: Record the signing of the contract in the Street Improvement Fund general journal. This transaction has no effect at the government-wide level. 5. [Para. 5-b-7] On May 6, 2014, 4% deferred serial bonds with a face value of $2,000,000 were sold for a total amount of $2,068,000, of which $28,000 was for accrued interest from the January 1, 2014, date of the bonds and $40,000 was a premium on the bonds sold. Cash in the amount of the accrued interest and premium was deposited directly in the Street Improvement Bond Debt Service Fund. Cash in the amount of $2,000,000 was deposited and recorded in the Street Improvement Fund. The city invested $1,000,000 of the bond proceeds in certificates of deposit maturing in six months and earning 3% per annum. Required: Record these transactions in the Street Improvement Fund and governmental activities journals. (Hint: In addition to recording the liability for bonds payable in the governmental activities journal, you should record the premium on the bonds payable [credit Premium on 4% Deferred Serial Bonds] and accrued interest on bonds sold [we recommend that you credit ExpenseInterest on Long-term Debt] in the governmental activities general journal for the $28,000 of accrued interest.) For now you should ignore the entries in the Street Improvement Bond Debt Service Fund to record the accrued interest and premium. Those entries will be made in Chapter 6 of this cumulative problem. 8. [Para. 5-b-8] The city repaid the $50,000 tax anticipation note plus interest of $375 ($50,000 X .03 X 90/360) (See transaction 2). Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. The $375 of interest should be debited to Interest Expenditures in the Street Improvement Fund journal and to ExpensesGeneral Government in the governmental activities journal. 9. [Para. 5-b-9] In July 2014, the contractor for the Elm Street Project reported that the project was one-half completed and requested a progress payment of $1,000,000. This amount was paid in late July, less the contractual retention of 4 percent. Required: Record this transaction in both the Street Improvement Fund and governmental activities general journals. 10. [Para. 5-b-10] Construction engineers engaged by the city submitted design plans and specifications for the second street improvement project, the \"Spruce Street Project.\" Vouchers were approved in the amount of $30,000 in payment for the engineering services. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. (Note: This transaction was not encumbered.) 11. [Para. 5-b-11] During August 2014, the city issued a purchase order in the amount of $350 for advertisements soliciting construction bids for the Spruce Street Project. Later in the month, a bill was received in the amount of $340 for the advertisements and a voucher was approved for payment. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals, as applicable. 12. [Para. 5-b-12] Two property owners along Elm Street claimed a new sidewalk was constructed further from the street than where they had granted easements. A resurvey confirmed that the sidewalk was constructed in the wrong place, but the city did not believe that the property owners were entitled to damages. The property owners sued the city in court and were awarded a total of $9,000, which was recorded as a judgment liability during October 2014. The amount will be borne by the Street Improvement Fund; it will not be recoverable from the contractor. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. You should debit Construction Expenditures in the Street Improvement Fund and Construction in Progress at the government-wide level. 13. [Para. 5-b-13] Construction bids for the Spruce Street Project were opened and evaluated. A bid in the amount of $1,500,000 was accepted, and the contract, bearing a 4 percent retention clause was signed in October 2014. Required: Record this transaction in the Street Improvement Fund. 14. [Para. 5-b-14] In November 2014, the 3% certificates of deposit matured; the face amount of $1,000,000 plus interest of $15,000 was collected. The interest is considered revenue of the Street Improvement Fund. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. 15. [Para. 5-b-15] All outstanding vouchers were paid. In addition, the judgment payable (see Transaction 12) and interest thereon of $90 were paid on the same date. The interest is to be borne by the Street Improvement Fund and is not to be capitalized. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. The $90 interest should be debited to Interest Expenditures in the Street Improvement Fund journal and to ExpensesGeneral Government in the governmental activities journal. 16. [Para. 5-b-16] In late November 2014 the Elm Street project was completed and the contractor for the project requested a final payment of $980,000. This amount was recorded as a liability. Payment was made, less the retained percentage, on December 1, 2014. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. 17. [Para. 5-b-17] Additional sales taxes were collected in the amount of $310,000 prior to December 1, 2014. $200,000 of this amount was invested in 3% U.S. Treasury notes at par. No interest was accrued on the notes at date of purchase. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. 18. [Para. 5-b-18] Upon final inspection of the Elm Street Project, the city inspector determined that all work conformed to specifications. Retained percentages (Transactions 9 and 16) were paid to the contractor. Required: Record this transaction in both the Street Improvement Fund and governmental activities journals. Total construction costs for the Elm Street Project should be capitalized in the Infrastructure account in governmental activities. 19. [Para. 5-b-19] Based on retail sales estimates from the state Department of Revenue, additional sales taxes were accrued in the amount of $40,000. On December 31, 2014, $500 of interest was accrued on the investment in Treasury notes. Fair market value of these notes was the same as cost on December 31, 2014. Assume that both amounts are scheduled to be received within 60 days. Required: Record these transactions in both the Street Improvement Fund and governmental activities journals. 20. Verify the accuracy of all your preceding entries in the Street Improvements Fund and governmental activities general journals, then click [Post Entries] of each entity to post the entries to the respective general ledgers. For the Street Improvement Fund only, prepare year-end closing entries for 2014 and post them to the fund's general ledger. (Note: You must click on the box for [Closing Entry] to check mark it; \"Closing Entry\" will appear in the [Transaction Description] box for the account being closed. Be sure the check mark is present for each account being closed.) Click [Post Entries] to post the closing entry. Under current GASB standards encumbrances and encumbrances outstanding are not reported in any financial statements. Consequently, there is no need to close these accounts since the Spruce Street Project is still underway at year-end. Closing entries will be made in the governmental activities general journal in Chapter 9 of this cumulative problem. Ignore those entries for now. a. Go to [Reports], print the pre-closing trial balance and the post-closing trial balance for year 2014 from the \"Reports\" window for retention in your cumulative file until directed by your instructor to submit them, or submit saved versions of these documents by e-mail if directed to do so by your instructor. As of this time, only the budget has been recorded. (Note: To ensure that your saved files are not erased when year-end trial balances or subsidiary ledger account balances are saved in Chapter 6, you should add \"_after Ch5\" to your saved file names. [Note: Retain all required printouts and your financial statements in your cumulative folder until directed by your instructor to submit them, unless your instructor prefers to have computer files submitted via e-mail.]