Question

During the fiscal year ended June 30, 20X9, the city of Moorhead constructed a new courthouse that was budgeted to cost $5,000,000. Moorhead used a capital projects fund to account for the construction activities. In July of 20X8, a bid was accepted from Diamond Construction to build the courthouse for $4,800,000. On June 15, 20X9, Diamond completed construction and submitted a bill to the city for $4,900,000. The city accepted the bill and paid Diamond the entire amount owed, except for a 10 percentage retainage. On the statement of revenues, expenditures, and changes in fund balance prepared for the capital projects fund for the year ended June 30, 20X9, expenditures should be reported at

Answer 1

Expenditures should be reported at $4,900,000

Step-by-step explanation:

According to the given data On June 15, 20X9, Diamond completed construction and submitted a bill to the city for $4,900,000.

As city already accepted the bill and identified the liability, which they have to pay in case construction meets all the agreed requirement. 10% is just retention to deduct only if work not as per agreed terms and requirement

Hence, The expenditure will be recorded at actual amount spent for construction irrrespective of budget or retention amount.

So, so expenditures will be $4,900,000