1 In 2015 Better City received 5000000 of bond proceeds to b

1. In 2015 Better City received $5,000,000 of bond proceeds to be used for capital projects. Of this amount, $1,000,000 was expended in 2015. Expenditures for the $4,000,000 balance were expected to be incurred in 2016. These bond proceeds should be recorded in capital projects funds for

a. $5,000,000 in 2015

b. $5,000,000 in 2016

c. $1,000,000 in 2015 and $4,000,000 in 2016

d. $1,000,000 in 2015 and in the general fund for $4,000,000 in 2015

Solution

Answer:c. $1,000,000 in 2015 and $4,000,000 in 2016

Since grant was expended in parts in two years the same should be reflected in the year of expense .So the Bond proceeds should be recorded in capital projects funds for $1,000,000 in 2015 and $4,000,000 in 2016.