Maxim County just completed construction of a new town hall to be used for its government offices. The employees have moved in and the new building is officially in use. The county used a capital projects fund to account for the construction of the building, and the building came in under budget. There is a fund balance of $12,000. The county should:

Question

Amelie Brock

Business

31 August, 06:26

Maxim County just completed construction of a new town hall to be used for its government offices. The employees have moved in and the new building is officially in use. The county used a capital projects fund to account for the construction of the building, and the building came in under budget. There is a fund balance of $12,000. The county should:

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Answers (1)

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Osvaldo Hunt · Answer 1

The options are:

A) Transfer the remaining funds to the General Fund to pay operating expenses.

B) Transfer the remaining funds to the debt service fund that will be handling the long-term debt incurred for the construction of the building.

C) Return the excess to the source of the restricted funding.

D) All of the above may be appropriate ways to treat the fund balance.

Answer:

D) All of the above may be appropriate ways to treat the fund balance.

Explanation:

Maxim county used a capital projects fund to account for the construction of the new building, the following ways can be used to treat the excess of $12,000.

- We could transfer the excess of $12,000 to general fund to pay for operating expenses incurred.

- The excess could also offset some of the long term debt incurred when constructing the building.

- Finally the excess can be returned to source.