10518     ENTRY NO. 18 [EXPENDITURES FOR PROJECT PREPAYMENTS ARE REPORTED BY A CONSTRUCTION AGENCY]
(Revised 5/87)

Nature of Transaction:

Reports of expenditures made during the fiscal year from project advances on projects not yet completed are received from the Department of Transportation or Department of Water Resources.

Journal Entry for General Ledger Accounts:
Debit:
2350 Construction Work in Progress a/
5330 Reserve for Prepaid Items b/
Credit:
1730 Prepayments to Other Funds or Appropriation b/
5200 Investment in General Fixed Assets a/
 
a/ amount of expenditures on projects that will be capitalized in the property accounts when completed.
b/ amount of expenditures made during the period of the report, both for projects that will be capitalized upon completion and other work that will not be capitalized.

Source:
Document:
Reports of expenditures by construction agencies.

Explanation:
When construction agencies report to client agencies the expenditures made from prepayments, the prepayment account and the contra reserve are reduced by the amount of such expenditures, thereby reducing the prepayment account to the amount still unexpended by the construction agency. If the expenditures are for a project that will be capitalized in the property records, the amount of such expenditures on uncompleted projects also will be debited to Account No. 2350 and credited to Account No. 5200. No entry to the expenditure accounts is required since the total amount advanced will have been accounted as an expenditure.