The City Of St Louis Mississippi Population Just

Question

The City of St. Louis, Mississippi (population just under 24,000) passed a bond issue for $2,500,000, 4.5 percent, semiannual interest, 10 year bonds to finance the construction of a second high schoo…

The City of St. Louis, Mississippi (population just under
24,000) passed a bond issue for $2,500,000, 4.5 percent, semiannual
interest, 10 year bonds to finance the construction of a second
high school to be called McGhee High, named in memory of the
Pulitzer Prize winning author, William Faulkner. The State also
contributed $110,000 for construction of the gymnasium. The
contractor selected then submitted her contract for $2,080,000 to
commence on January 2, 2019, with the project’s estimated
completion in late 2019.

Part 1:

  1. The contractor submitted her signed contract to the City of St.
    Louis. The entry to record the contract in the Debt Services Fund
    would include a:

A. Debit to Encumbrances—2019, $2,500,000.

B. Debit to Construction Work-in-Progress, $2,080,000.

C. Credit to Encumbrances—2019, $2,080,000.

D. Credit to Encumbrances Outstanding—2019, $2,080,000.

  1. The money from the State of Mississippi of $110,000 was
    received by the City of St. Louis’ General Fund. The monies were
    then transferred from the General Fund to the Capital Project Fund.
    The entry in the General Fund receiving the grant money from the
    state would include a:

A. Credit to Program Revenues—Public Education—Capital Grants
and Contributions, $110,000.

B. Credit to Revenues, $110,000.

C. Debit to Other Financing Uses—Transfers-out, $110,000.

D. Credit to Other Financing Uses—Transfers-in, $110,000.

  1. The entry in the General Fund transferring the state monies to
    the Capital Projects Fund would include a:

A. Debit to Cash, $110,000.

B. Credit to Cash, $110,000.

C. Debit to Other Financing Sources, $110,000.

D. Credit to Other Financing Uses, $110,000

  1. The entry in the Capital Projects Fund receiving the
    transferred state monies from the General Fund would include
    a:

A. Credit to Other Financing Sources, $110,000.

B. Debit to Other Financing Uses, $110,000.

C. Credit to Cash, $110,000.

D. Credit to Grants Receivable, $110,000

  1. When the contractor submitted a $700,000 progress billing, the
    following entry in the Capital Projects Fund would include:

A. Debit to Encumbrances—2019, $700,000.

B. Credit to Cash, $700,000.

C. Debit to Encumbrances Outstanding—2019, $700,000.

D. Debit to Construction-work-in progress, $700,000

Part 2:

6. Assuming the partial billing was approved for payment and the
expenditure and liability (contracts payable) was recorded for
$700,000; however, St. Louis has a policy of not paying 100
percent, but retaining 20 percent as a retained percentage. The
entry in the Capital Projects Fund to record the allowed payment
and retained percentage would include:

A. Credit to Cash, $560,000.

B. Debit to Contracts Payable, $560,000.

C. Credit to Contracts Payable—Retained Percentage,
$560,000.

D. Debit to Contracts Payable, $140,000.

  1. Prior to the receipt of the bond proceeds, St. Louis needed
    funds and went to Southern Style Bank to borrow $600,000 in bond
    anticipation notes (BANs), at 5 percent, which were to be paid back
    using the proceeds of the $2,500,000 bond issue. The entry at the
    government-wide level to record the receipt of the bond
    anticipation notes would include a:

A. Credit to Other Financing Sources—proceeds of BANs,
$600,000.

B. Debit to Cash, $1,900,000.

C. Credit to Bonds Payable, $600,000.

D. Debit to Cash, $600,000.

  1. Assume the bond issue commences, and the $2,500,000 proceeds
    are received. St. Louis repays the bond anticipation notes in full
    along with $7,500 in interest. The entry recorded in the Capital
    Projects Fund to repay the bond anticipation notes would include
    a:

A. Debit to Other Financing Uses—Retirement of BANs,
$600,000.

B. Credit to Cash, $600,000.

C. Debit to Bond Anticipation Notes Payable, $600,000.

D. Debit to Expenses—Interest on Long-term Debt, $7,500.

Part 3:

  1. Assume that at the conclusion of the construction project that
    the total costs totaled $3,200,000. This included some cost
    overruns. Assuming the high school passes all inspections and the
    asset is placed into service, the re-class entry to record the
    Building in the Capital Projects Fund would include:

A. Credit to Buildings, $3,200,000.

B. Debit to Buildings, $3,200,000.

C. No entry would be recorded in the Capital Projects Fund.

D. Credit to Encumbrances—2019, $3,200,000

  1. In the Capital Projects Fund, which of the following accounts
    would be part of the closing entry at the end of the project?

A. Cash.

B. Other Financing Sources—Proceeds of Bonds.

C. Expenses—Interest on Long-term Debt.

D. Construction Work in Progress

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Solutions

Expert Solution

Dear Student,

As per the WritersAnswers POLICY only the first four questions should be
answered. Kindly take note of it.

1. option B. Debit to Construction Work-in-Progress,
$2,080,000

Encumbrances are not associated with debt services fund.

2. answer is option B. Credit to Revenues, $110,000

Any grant received is the revenue for the city.

3. answer is option D. Credit to Other Financing Uses,
$110,000

Transferring money is referred to as a use of money.

4. answer is option A. Credit to Other Financing Sources,
$110,000

Receiving money through transfer is one of the financing
sources.


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