Problem $3$ Grant Accounting and Reporting$($Worth $10$ Points$)$

Over the course of one year, Obed County received two grants:

$$ $$10,000$ grant $($in cash$)$ to be used to finance half the cost of expanding the town$$s water treatment plant. All eligibility requirements are met once qualifying costs are incurred.

$$ $$40$ grant to educate users

on water conservation measures and to monitor water usage by a study group. No cash was received upon notification of the award.

Transactions:

$1.$ Received the grant to assist in expanding the water treatment plant.

$2.$ Signed a contract with Swann & Hall Construction to build the water treatment plant expansion, $$20,000.$ The construction project is expected to take less than one year.

$3.$ Received a $$5,000$ transfer from the General Fund to cover part of the cost of expanding the treatment plant.

$4.$ Received an invoice from S&H Construction for $$6,000,000$ on the project for work completed to date. Paid the contractor the invoiced amount less a $10\%$ retainage.

$5.$ Received the grant to do the water study, but no cash was received in advance.

$6.$ Issued $$5,000$ in bonds at mid$-$year at par to provide part of the financing for the treatment plant expansion. The bond issue costs were $1\%$ of the face value. The bonds bear interest at $6\%,$ payable semiannually on January $1$ and July $1.$

$7.$ Received a second invoice for $$10,000,000$ on the project. Paid the contractor the invoiced amount less a $10\%$ retainage.

$8.$ Expenses incurred and paid during the year under this second grant total $$30.$

$9.$ Received the final invoice from the contractor $($$$4,000,000).$ The expansion project was finished on$-$time and in accordance with the contract. Paid the contractor all amounts owed.

$10.$ Make any necessary year$-$end adjusting entries.

Requirements:

$1.$ Prepare the journal entries required in an Enterprise. If no entry is required, state $$No entry required$$ and explain why.

$2.$ How would these grants be reported in the statement of revenues, expenses, and changes in net position of the Enterprise Fund?

$3.$ Assuming year$-$end had occurred after transaction #$4,$ how would the grant and transfer affect the Statement of Net Position for the Enterprise Fund.