The use of subsidiary ledgers is limited to Accounts Payable and ...

[123654777]

The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable.
 a. True
  b. False
 
   Indicate whether the statement is true or false

Question 2

(Journal entries for a major construction project)
 
  Prepare journal entries to record the following transactions of a state, identifying the funds affected by each transaction. Record journal entries for all funds affected.
 
  The state prepares a budget for the Capital Projects Fund and uses encumbrance accounting in that fund.
 
   a. The state records its capital budget. It appropriates 10 million for highway construction, which will be financed entirely with the issuance of bonds.
   b. The state sells 20-year 6 bonds having a face value of 10 million. The bonds are sold at a discount, so the state realizes a total of 9,900,000 . Equal installments of principal will be paid every six months, together with interest on the unpaid balance.
   c. The state awards two contracts, one for highway construction (6,500,000) and one for construction supervision (350,000). Both contracts provide for progress payments. The highway construction contract provides for 10 retainage pending completion of the project. There is no retainage on the construction supervision contract.
   d. The construction contractor submits an invoice for 1,500,000 . The invoice is approved and a voucher is prepared, less the 10 retainage.
   e. The construction supervisor submits an invoice for 100,000, and a voucher is prepared.
   f. Both of the invoices in transactions d. and e. are paid.
   g. The state transfers 800,000 from the General Fund to the Debt Service Fund in anticipation of the payment of debt service on the bonds.
   h. The first semi-annual debt service on the 20-year bonds becomes due and payable (see transaction b).
   i. The debt service is paid.

[Rilsmarie951]

Answer to Question 1

False

Answer to Question 2

a. CPF
Estimated other financing sources 10,000,000
Appropriations 10,000,000

b. CPF
Cash 9,900,000
Other financing use  bond issue discount 100,000
Other financing source - long-term debt issued 10,000,000

c. CPF
Encumbrances  capital project 6,850,000
Budgetary fund balance reserved for encumbrances 6,850,000

d. CPF
Budgetary fund balance reserved for encumbrances 1,500,000
Encumbrances  capital project 1,500,000

Expenditures - construction costs 1,500,000
Construction contracts payable 1,350,000
Retainage payable 150,000

e. CPF
Budgetary fund balance reserved for encumbrances 100,000
Encumbrances - capital project 100,000

Expenditures - construction supervision 100,000
Vouchers payable 100,000

f. CPF
Construction contracts payable 1,350,000
Vouchers payable 100,000
Cash 1,450,000

g. GF
Transfer out to Debt Service Fund 800,000
Cash 800,000

DSF
Cash 800,000
Transfer in from General Fund 800,000

h. DSF
Expenditures - bond principal 250,000
Expenditures - interest 300,000
Matured bonds payable 250,000
Matured interest payable 300,000

i. DSF
Matured bonds payable 250,000
Matured interest payable 300,000
Cash 550,000

[123654777]

Thanks for the timely response, appreciate it

[coreycathey]

Gracias!