The Following Events Occurred in the Highway Capital Projects Fund

Essay

The following events occurred in the highway capital projects fund for the State of Montana during the past year:
1) A highway improvement project was authorized, at an expected cost of $35,000,000. This project is expected to last two years. Budgetary accounts are recorded directly on the books of the capital projects fund. Bonds of $25,000,000 were authorized to help finance the project, and the remaining funds were budgeted to come from general fund resources.
2) Bonds of $25,000,000 were issued in the first year at par, and the general fund transferred $10,000,000 to the capital projects fund.
3) Winning bids were accepted from contractors in the amount of $33,800,000.
4) First year expenditures on the project were $20,000,000. $19,900,000 in cash was paid.
The State's spending policy is to use restricted resources first, and then committed resources.
Required
a. Prepare entries to record the year's events, including budget, adjusting and closing entries.
b. Prepare the highway capital projects fund operating statement for the year, and the end of year balance sheet.