Final answer:
To record the transactions for the City of Loveland's public safety building project, several journal entries are needed including attributing the federal grant to financing sources, recording expenditures, closing the capital projects fund, and recording the completed building's cost.
Step-by-step explanation:
To prepare journal entries for the transactions entered into by the City of Loveland, one must understand the flow of funds for the capital project. The financing for the capital project, including the new public safety building, involved a prior year bond issue and a current year federal capital grant. The expenditures for the project for the current year need to be recorded as well as the costs attributed to the completion of the building.
Journal Entries
- To record the federal capital grant received in the current year:
Debit: Cash $720,000
Credit: Other Financing Sources - Federal Grant $720,000
- To record the current year expenditures for the capital project:
Debit: Expenditures $1,176,000
Credit: Cash $1,176,000
- To close the capital projects fund upon completion of the building (total project costs):
Debit: Other Financing Uses - Transfer Out $9,720,000
Credit: Capital Projects Fund Balance - Unreserved $9,720,000
- To record the cost of the completed public safety building:
Debit: Buildings $9,720,000
Credit: Other Financing Uses - Transfer In $9,720,000
The full cost of the building ($9,720,000) is recognized in the governmental activities at the government-wide level and attributed completely to the new public safety building since the construction took place on city-owned property.