Residents from the Town of Mountain View authorized a $7,200,000 renovation to their historic town hall on November 15, 2019. Financing for the project consists of $2,800,000 from a 6 percent serial bond issue, $2,300,000 from a state grant, and $2,100,000 from the General Fund. Debt service for the serial bonds will be provided by a one-quarter-cent city sales tax imposed on every dollar of sales in the city. The town has a calendar year-end. Required Prepare journal entries to record the related transactions in the town's capital projects fund, debt service fund, and governmental activities at the government-wide level. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Transaction Fund General Journal Debit Credit a. Record the 2020 budget for the Serial Debt Service Fund. Sales taxes of $220,000 are expected to be collected in 2020; the only appropriation is expected to be six months of interest on the serial bond. a Debt Service fund Estimated Revenues Appropriations Budgetary Fund Balance Capital Projects Fund No Journal Entry Required Governmental Activities No Journal Entry Required 220,000 84,000 136,000 b. The town transfers $2,100,000 from the General Fund to a newly established capital projects fund. b Debt Service fund No Journal Entry Required Capital Projects Fund Cash 2,100,000 Other Financing Sources-Interfund Transfers In 2,100,000 Governmental Activities No Journal Entry Required c. Planning and architect's fees for the town hall renovation are paid in the amount of $300,000. C Debt Service fund No Journal Entry Required Capital Projects Fund Construction Expenditures Cash Governmental Activities Construction Work in Progress Cash 300,000 300,000 300,000 300,000 d. The town hall renovation construction contract is awarded to a local contractor, Central Paving and Construction, for $5,904,000. d Debt Service fund No Journal Entry Required Capital Projects Fund Encumbrances Encumbrances Outstanding Governmental Activities No Journal Entry Required 5,904,000 5,904,000 e. On April 1, 2020, the town issues serial bonds with a face value totaling $2,800,000 and having maturities ranging from one to 20 years at 102. The bonds bear interest of 6 percent per annum, payable semiannually on April 1 and October 1. e(1) e(2) Debt Service fund Record the issue of bonds in the Debt Service Fund Cash 56,000 Estimated Other Financing Sources-Premium on Bonds 56,000 Premiums on bonds issued must be deposited directly in the debt service fund and are restricted for debt service. (Remember to amend the debt service fund budget because this premium was not anticipated.) Estimated Other Financing Sources-Premium on Bonds 56,000 Budgetary Fund Balance 56,000 e(3) Capital Projects Fund Premiums are amortized using the straight-line method over 40 interest periods. Record the issue of bonds. Cash 2,800,000 Other Financing Sources-Proceeds of Bonds 2,800,000 e(4) Governmental Activities Record the issue of bonds. Cash Premium on Bonds Payable Bonds Payable 2,856,000 56,000 2,800,000 f. The capital projects fund paid the city's Utility Fund $60,000 for wiring associated with the renovation. No encumbrance had been recorded for this service. f Debt Service fund No Journal Entry Required Capital Projects Fund Construction Expenditures Cash 60,000 60,000 Governmental Activities Construction Work in Progress 60,000 Cash 60,000 g. On October 1, 2020, the city mailed checks to bondholders for semiannual interest on the bonds. g Debt Service fund Expenditures-Interest Cash Capital Projects Fund No Journal Entry Required Governmental Activities Premium on Bonds Payable Expenses-Interest on Long-term debt Cash h. Sales taxes earmarked for debt service of $220,000 were collected. h Debt Service fund Cash Revenues Capital Projects Fund No Journal Entry Required Governmental Activities Cash General Revenues-Taxes 84,000 84,000 2,100 81,900 84,000 220,000 220,000 220,000 220,000 i. Central Paving and Construction submitted a progress billing to the town for $2,800,000. The city's public works inspector agrees that all milestones have been met for this portion of the work. i Debt Service fund Capital Projects Fund No Journal Entry Required Record the reversal of encumbrances for the progress to date on the project and also the construction expenditure for the invoice received. Encumbrances Outstanding Construction Expenditures Encumbrances Contracts Payable Governmental Activities Construction Work in Progress Contracts Payable 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 j. The town paid Central Paving and Construction the amount it had billed, except for 6 percent that was withheld as a retained percentage per terms of the contract. j Debt Service fund No Journal Entry Required Capital Projects Fund Contracts Payable Contracts Payable-Retained Percentage Cash 2,800,000 168,000 2,632,000 Governmental Activities Contracts Payable Contracts Payable-Retained Percentage Cash 2,800,000 168,000 2,632,000 k. Grant funds totaling $2,300,000 are received from the state historical society because eligible expenditures have been made. k Debt Service fund No Journal Entry Required Capital Projects Fund Cash Revenues Governmental Activities Cash Program Revenue-General Government 2,300,000 2,300,000 2,300,000 2,300,000 I. At year-end, closing entries are made; In the capital projects fund, $2,100,000 of the fund balance is assigned, and the remainder is restricted. I(1) Debt Service fund Appropriations Budgetary Fund Balance Estimated Revenues Estimated Other Financing Sources-Premium on Bonds 84,000 192,000 220,000 56,000 1(2) Record the entry to close the operating statement account in the Debt Service Fund. Revenues Other Financing Sources-Premium on Bonds Payable 220,000 56,000 84,000 192,000 Expenditures-Interest Fund Balance-Restricted 1(3) Capital Projects Fund Record the entry to close the budgetary statement account in the Capital Projects Fund. Revenues 2,300,000 Other Financing Sources-Interfund Transfers In 2,100,000 Other Financing Sources-Proceeds of Bonds 2,800,000 Construction Expenditures Fund Balance-Restricted Fund Balance-Assigned 2,100,000 m. Record the 2021 budget for the Serial Debt Service Fund; $170,000 of earmarked sales taxes are expected to be collected in 2021; appropriations include a $280,000 principal payment on April 1 and two serial bond interest payments. m Debt Service fund Capital Projects Fund Governmental Activities n. Sales tax collections for debt service amounted to $280,000. n Debt Service fund Capital Projects Fund Governmental Activities o. Central Paving and Construction submitted a final billing to the town for $2,300,000. Upon final inspection by the Public Works Department, a leak was discovered in the roof. 0 Debt Service fund Record the reversal of encumbrances for the progress to date on the project and also the construction expenditure for the invoice received. Capital Projects Fund Governmental Activities p. Public works employees installed a new sidewalk and landscaping at a total cost of $130,000. p Debt Service fund Capital Projects Fund Governmental Activities q. The roof leak was repaired satisfactorily, and the city paid the final billing and all retainages. Debt Service fund Capital Projects Fund Governmental Activities r. The April 1 debt service payments are made. r Debt Service fund Capital Projects Fund Governmental Activities s. The renovation is considered complete and appropriate amounts are reclassified as buildings and improvements other than buildings (i.e., landscaping). s(1) Debt Service fund s(2) All capital projects fund nominal accounts are closed, and remaining cash in the capital projects fund is transferred to the debt service fund. (Remember to amend the debt service fund budget because this transfer was not anticipated.) s(3) Capital Projects Fund Record the receipt for debt service payments. s(4) s(5) Record the transfer of capital project funds to the debt service fund. Record the closing entry after transfer out.