What are the closing entries for the Street Improvement Fund Account and what would the Balance Sheet look like? Chapter

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What are the closing entries for the Street Improvement Fund
Account and what would the Balance Sheet look like?
Chapter 5 Recording Capital Asset Transactions Street
Improvement Capital Projects Fund and Governmental Activities at
the Government-wide Level
During late 2016, the voters of the City of Smithville
authorized tax-supported bond issues totaling $8,000,000 as partial
financing for a series of projects to construct streets, curbs,
culverts, and storm sewers in various parts of the city. The
estimated total cost of the series of projects, which are expected
to extend over the next three years, was $10,200,000. In addition
to the bondfinancing, voters also approved a special ½ cent sales
tax to assist in financing the projects. The sales tax begins
January 1,2017 and will continue for fiveyears. The sales tax is
projected to generate $500,000 each year. Required a. Prepare
general journal entries as necessary to record the transactions
described below in the Street Improvement Fund general journal and,
if applicable, in the governmental activities general journal. Do
not record entries at this time in other affected funds; those
entries will be made in the later chapters of this cumulative
problem that cover the affected funds. Use account titles listed
under the drop down [Account (# - Description)] menu. Be sure the
year 2017 is selected from the drop-down [Year] menu and the
appropriate paragraph number shown in bold-face font below is in
the [Transaction Description] box. Before closing the City of
Smithville, click on [File], and [Save/Save As] to save your work.
If you close the file by clicking on the [X] box you will be asked
if you want to save your changes before closing. 1.[Para. 5-a-1] In
early 2017, design plans and specifications for the first project,
the Elm Street Project, were submitted by a construction
engineering firm. The firm billed the Street Improvement Fund for
$125,000. Required: Record this billing and the related Vouchers
Payable liability in the Street Improvement Fund and governmental
activities journals. (Note: this transaction was not encumbered.)
2. [Para. 5-a-2] On April 15, 2017, construction bids were opened
and analyzed. A bid of $2,100,000 was accepted, and the contract
was awarded for the Elm Street Project. The contract provided for a
retained percentage of 5 percent from each progress payment, and
from the final payment, until final inspection and acceptance by
the city’s public works inspectors. Required: Record the signing of
the contract in the Street Improvement Fund general journal. This
transaction has no effect at the government-wide level. [Para.
5-a-3] On May 6, 2017, 4% deferred serial bonds with a face value
of $2,000,000 were sold for a total amount of $2,070,000, of which
$28,000 was for accrued interest from the January 1, 2017 date of
the bonds and $42,000 was a premium on the bonds sold.Cash in the
amount of the accrued interest and premium was deposited directly
in the Street Improvement Bond Debt Service Fund. Cash in the
amount of $2,000,000 was deposited and recorded in the Street
Improvement Fund. Required: Record this transaction in the Street
Improvement Fund and governmental activities journals. (Hint: In
addition to recording the liability for bonds payable in the
governmental activities journal, you should record the premium on
the bonds payable [credit Premium on Deferred Serial Bonds] and
accrued interest on bonds sold [we recommend that you credit
Expenses—Interest on Long-term Debt] in the governmental activities
general journal for the $28,000 of accrued interest.) For now you
should not make the entry in the Street Improvement Bond Debt
Service Fund to record the accrued interest and premium. That
entrywill be made in Chapter 6 of this cumulative problem. 4.
[Para. 5-a-4] Vouchers payable (see Transaction 1) were paid on
April 20, 2017. Required: Record this transaction in both the
Street Improvement Fund and governmental activities general
journals. [Para. 5-a-5] In July 2017, the contractor for the Elm
Street Project reported that the project was one-half completed and
requested a progress payment of $1,050,000. Required: Record the
liability for the progress billing in both the Street Improvement
Fund and governmental activities general journals. [Para. 5-a-6]
The billing for the partially completed Elm Street Project (see
Transaction 5)was paid in late July, less the contractual retention
of 5 percent. Required: Record this transaction in both the Street
Improvement Fund and governmental activities general journals.
7.[Para. 5-a-7] In late November 2017 the Elm Street Project was
completed and the contractor for the project requested a final
payment of $1,070,000. This amount was recorded as a liability.
Required: Record the liability for the final billing in both the
Street Improvement Fund and governmental activities journals.
8.[Para. 5-a-8] During the year sales taxes were collected in the
amount of $450,000. Required: Make the summary journal entries in
both the Street Improvement Fund and governmental activities
journalsto record the collection of sales taxes. 9.[Para. 5-a-9]
Payment was made for the final billing on the Elm Street Project,
less the retained percentage, on December 1, 2017. Required: Record
this transaction in both the Street Improvement Fund and
governmental activities journals. 10.[Para. 5-a-10] Upon final
inspection of the Elm Street Project, the city inspector determined
that all work conformed to specifications. Retained percentages
(Transactions 6 and 8) were paid to the contractor. Required:
Record this transaction in both the Street Improvement Fund and
governmental activities journals. Total construction expenditures
for the Elm Street Project should be capitalized in the
Infrastructure account in governmental activities. 11.Verify the
accuracy of all your preceding entries in the Street
ImprovementFund and governmental activities general journals, then
click [Post Entries] of each entity to post the entries to the
respective general ledgers. For the Street Improvement Fund only,
prepare year-end closing entries for 2017 and post them to the
fund’s general ledger. Accounts should be closed to Fund
Balance—Restricted. (Note: You must click on the box for [Closing
Entry] to check mark it;“Closing Entry” will appear in the
[Transaction Description] box for the account being closed. Be sure
the check mark is present for each account being closed.) Click
[Post Entries] to post the closing entry. Cash remaining in the
Street Improvement Fund at year-end is not transferred to the debt
service fund since other street improvement projects will be
undertaken during the next two years. Closing entries will be made
in the governmental activities general journal in Chapter 9 of this
cumulative problem. Ignore those entries for now. c. Export the
post-closing trial balance for year 2017 to an Excel worksheet and
use Excel to prepare a balance sheet for the Street Improvement
Fund as of December 31, 2017. (See Illustration 4-3 in the textbook
for an example of an appropriate format of a governmental fund
balance sheet.) In addition, save and print the post-closing trial
balance from the [Reports] drop-down menu. d. Export the
pre-closing trial balance for year 2017 to an Excel worksheet and
use Excel to prepare a statement of revenues, expenditures, and
changes in fund balance for the Street Improvement Fund for the
year ended December 31, 2017. (See Illustration 5-3 in textbook for
an example of the format of a capital projects fund statement of
revenues, expenditures and changes in fund balance.) Save and print
the pre-closing trial balance from the [Reports] drop-down menu.
[Note: Retain all required printouts and your financial statements
in your cumulative folder until directed by your instructor to
submit them, unless your instructor prefers to have computer files
submitted electronically, in which case you will need to save a
.pdf version of your trial balance.]