The transactions of a capital projects fund can be derived from its
basic financial statements.
Crystal City established a capital projects fund to
account for the construction of a new bridge. During the
year the fund was established, the city issued bonds, signed
(and encumbered) $6 million in contracts with various
suppliers and contractors, and incurred $4.3 million of
construction costs. It temporarily invested a portion of the
bond proceeds and earned $20,000 in interest, which was
received in cash. The accompanying statement of revenues,
expenditures, and changes in fund balance and balance sheet
were taken from its year-end financial report.
Based on the data in the two statements, as well as
those provided in the previous paragraph, prepare journal
entries to summarize the transactions in which the fund
engaged. You should prepare budgetary entries, but need
not prepare closing entries.
Problems
249
Crystal City, Capital Projects Fund Statement
of Revenues, Expenditures, and Changes in
Fund Balance—Actual and Budget
Year Ended December 31
(in thousands)
Actual Budget
Revenues
Cash grant from state $ 2,000 $ 2,000
Interest 20
Total revenues $ 2,020 $ 2,000
Expenditures
Bond issue costs $ 50
Construction costs 4,300 5,000
Total expenditures $ 4,350 $ 5,000
Excess of revenues over
expenditures $ (2,330) $ (3,000)
Other financing sources (uses)
Proceeds of bonds $ 10,000 $ 10,000
Proceeds of bonds (premium) 200
Nonreciprocal cash transfer
of bond premium (less issue
costs) to debt service fund (150)
Increase in reserve for
encumbrances (1,700)
Total other financing
sources (uses) $ 8,350 $ 10,000
Excess of revenues and net
financing sources over
expenditures $ 6,020 $ 7,000
Fund balance, beginning of year 0 0
Fund balance, end of year $ 6,020 $ 7,000
Crystal City, Capital Projects Fund Balance
Sheet As of December 31 (in thousands)
Assets
Cash $ 5,320
Investments 5,000
Total assets $10,320
Liabilities
Accounts payable (to contractors) $ 2,600
Fund balance
Reserved for encumbrances $ 1,700
Unreserved 6,020
Total fund balance $ 7,720
Total liabilities and fund balance $10,320
