Chapter $5$

The city of Bonner started the construction of a new city hall in $2024.$ The building is expected to cost $$2,000,000$ and will be financed with a $$1\mathrm{.}5$ million$-$dollar bond issue and a capital grant from the state government. The city does not require a budget in its capital projects funds.

$1.$ The $$1\mathrm{.}5$ million bond issue were issued at $101.$ The city requires any premium to be deposited directly into a debt service fund.

$2.$ The city incurred and paid architecture and engineering costs of $$50,000.$

$3.$ The city entered into a construction contract with a local contractor for $$1\mathrm{.}9$ million.

$4.$ The city received an invoice from the contractor for $$1\mathrm{.}2$ million as a partial billing. The invoice was paid, less a $10$ percent retainage.

$5.$ The city received the expected grant from the state for a total of $$500,000.$

$6.$ The city received the final billing from the contractor totaling $$600,000.$ The building passed inspection and all amounts due to the contractor were paid.

$7.$ Any money left in the capital projects fund was transferred to the city's debt service fund.

$8.$ The required closing entries required were made in the city's capital projects fund $($fund level only, not the governmental activities$)$

Required:

a$.$ Prepare the journal entries required, for the above transactions, in the city's capital projects fund.

b$.$ Prepare the journal entries required, for the above transactions, in the governmental activities general journal.