Question

In Fulbright County, the Culture and Recreation Department constructed a library in one of the county's high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Fund. All activity related to the library construction occurred within the current fiscal year. The county operates on a calendar-year basis.

A construction contract was awarded in the amount of $6,800,000.
a. Debit: Construction Expense $6,800,000; Credit: Cash $6,800,000

b. Debit: Library Capital Project Fund $6,800,000; Credit: Cash $6,800,000

c. Debit: Cash $6,800,000; Credit: Library Capital Project Fund $6,800,000

d. Debit: Library Capital Project Fund $6,800,000; Credit: Construction Expense $6,800,000

Answer 1

The correct option is debit: Library Capital Project Fund $6,800,000; credit: Construction Expense $6,800,000.

Step-by-step explanation:

The correct option in this case is d. Debit: Library Capital Project Fund $6,800,000; Credit: Construction Expense $6,800,000.

When the Culture and Recreation Department constructed a library in Fulbright County, they would typically set up a Library Capital Project Fund to track the financial transactions related to the construction. The debit entry to the Library Capital Project Fund account reflects the amount allocated towards the construction project, while the credit entry to the Construction Expense account represents the cost of the construction.

The cash account is not involved directly in this transaction, as it only represents the amount of money the county has on hand and not the specific use of funds.