Previously Rose City issued bonds with a face value of $10 million to construct a new city maintenance facility.Assuming that the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives a progress billing from the contractor?

Question

Quizplus · Accepted Answer

When the City receives a progress billing from the contractor, it is an indication that the contractor has completed a certain portion of the project and therefore, the City incurs a corresponding expenditure. Thus, the appropriate entry is to Debit Expenditure and Credit Accounts payable. No entry should be made to Building or Cash at this point.

Previously Rose City Issued Bonds with a Face Value of $10