(Journal entries and financial statements for a street-lighting project financed with a special assessment)

The following entries were incurred between July 1, 2003, and June 30, 2004, for Brown Township:

1. The managing board approved the capital budget for the fiscal year July 1, 2003-June 30, 2004. Included in this budget was a drainage project that would be funded through special assessments and a contribution from the township. Intermediate financing was furnished by a bond issue that would be repaid with collections of the special assessments. The managing board also approved the budget for the project. Included in the budget were estimated revenues of $\$ 200,000$ for the current year and appropriations of $\$ 1,600,000$ for the project. The township's share of the cost for this project was $\$ 40,000$. Assume the township guaranteed payment of the special assessment bonds used to finance the project.

2. A construction contract with Jorge Construction Company was approved for $\$ 1,400,000$. The contract had a 10 percent retainage clause.

3. Special assessments totaling $\$ 1,360,000$ were levied against the property holders that would benefit from the project. Of this amount, $\$ 100,000$ was considered to be current and recognized as revenue. This same amount will become current next year.

4. Collections from property holders totaled $\$ 90,000$.

5. Special assessment bonds totaling $\$ 1,360,000$ were issued for $\$ 1,360,000$.

6. A progress billing was received from the contractor for $\$ 500,000$.

7. The contractor was paid the amount of the billing, less a 10 percent retainage. (Assume the city does not use a voucher system.)

8. Short-term securities were purchased for $\$ 900,000$, using Capital Projects Fund resources.

9. An additional billing was received from the contractor for $\$ 600,000$.

10. Investments that cost $\$ 600,000$ were redeemed for $\$ 620,000$. The difference was interest revenue.

11. The contractor was paid, less the agreed-upon retainage.
12. Investments that cost $\$ 300,000$ were redeemed for $\$ 330,000$. The difference was interest revenue.
13. The contractor completed the project and submitted a final bill for $\$ 300,000$. After an examination of the work, it was accepted by the city and the full amount of the billing, plus all previously retained amounts, was paid.
14. Interest of $\$ 140,000$ was paid on the special assessment bonds.
15. The township's share of the project was paid to the fund where the construction was recorded.
Required: 1. Prepare the journal entries necessary to record these events and indicate the fund(s) used. (Assume there is no interest on the assessments for 2003.)
2. Prepare a trial balance for the fund where the construction accounting was recorded.
3. Prepare all necessary year-end entries and closing entries in the Capital Projects Fund. After the project has been completed, any fund balance should be transferred to the Debt Service Fund. (Hint: Do not forget the status of the receivables in the Debt Service Fund at year-end.)
4. Prepare a statement of revenues, expenditures, and changes in fund balance and a balance sheet for the fund where the construction was recorded.