The Board of Supervisors of Hanover Township authorized construction of a $10,000,000 community center. The township will contribute $1,000,000 from general fund revenues and bonds will be issued for the rest. Construction activities will last about eighteen months. The project is reviewed after six months when the construction manager indicates that the project is 41 % complete and the township's $1,000,000 contribution was made. At that time, the following data from the capital projects fund are presented.
Cash-construction $1,500,000
Short-term investments 5,000,000
Cash-debt service 150,000
Construction in progress 4,500,000
Bonds payable 9,000,000
Bond anticipation notes payable 1,000,000
Encumbrances (balance of construction contract) 6,500,000
Required
a. At what amount were the bonds apparently issued?
b. Calculate the apparent potential cost overrun.
c. Identify the items above that are improperly reported in the capital projects fund.