Question

The city of waterville applied for a grant from the state government to build a pedestrian bridge over the river inside the city's park. On may 1, the city was notified that it had been awarded a grant of up to $200,000 for the project. The state will provide reimbursement for allowable expenditures. On may 5, the special revenue fund entered into a short-term loan with the general fund for $200,000 so it could start bridge construction. During the year, the special revenue fund expended $165,000 for allowable bridge construction costs, for which it submitted documentation to the state. Reimbursement was received from the state on december 13.

Answer 1

Answer and Explanation:

The journal entries are shown below:

For May 1

No Entry Required as eligibility should be completed before recognition.

For May 5

Cash $200,000

To Inter fund Loans Payable-Current $200,000

(Being cash is recorded)

During the year

Expenditure $165,000

To Voucher Payable $165,000

(being expenditure is recorded)

Due from State Government $165,000

To Revenues $165,000

(Being revenue is recorded)

On Dec 13

Cash $165,000

To Due from State Government $165,000

(being cash is recorded)

On Dec 31

Revenues $1165,000

To Expenditure $165,000

(being closing entry is recorded)

And other entries are not added as the balance of $35,000 is not fulfilled the eligibility