(Journal entries and financial statements-Capital Projects Fund) The following transactions occurred during 2004:

1. The City of Watersville approved the construction of an enclosed concert arena for a total cost of $\$ 75$ million to attract professional events. On

the same day, a contract with a 6 percent retainage clause was signed with B. P. Construction Company for the arena. The arena will be financed by a $\$ 75$ million general obligation bond issue. Investment revenue of $\$ 4$ million was also included in the budget. (Assume that the budget is recorded in the accounts and encumbrance accounting is used.)
2. The bonds were issued for $\$ 76$ million. The amount received over $\$ 75$ million was immediately transferred to the appropriate Debt Service Fund.
3. The city invested $\$ 74.9$ million in securities.
4. The contract signed with B. P. stipulated that the contract price included the architect fees. On this date, the architects were paid their fee of $\$ 25,000$ by Watersville. (Assume that a vouchers payable account was not used.)
5. The contractor submitted a progress billing of $\$ 3$ million.
6. Investments that cost $\$ 3$ million were redeemed for $\$ 3$ million plus $\$ 50,000$ interest.
7. B. P. was paid the amount billed less a 6 percent retained percentage.
8. Income totaling $\$ 3.7$ million was received on the investments.
9. B. P. submitted another progress billing of $\$ 8$ million.
10. Additional investments were redeemed to make the payment to B. P. The investments originally cost $\$ 7.8$ million. The proceeds of $\$ 8.1$ million included investment income of $\$ 300,000$.
11. The contractor was paid, less the 6 percent retainage.
12. Investment income of $\$ 60,000$ was accrued.
13. Investment income of $\$ 10,000$ was received in cash.
Required: 1. Prepare the journal entries necessary to record these transactions in the Capital Projects Fund. Assume that the city operates on a calendar year.
2. Prepare a trial balance for the Capital Projects Fund at December 31, 2004, before closing.
3. Prepare any necessary closing entries at December 31, 2004.
4. Prepare a statement of revenues, expenditures, and changes in fund balance for 2004, and a balance sheet as of December 31, 2004.
5. Prepare the journal entries necessary to record the remainder of the budget and to reestablish the budgetary accounts for encumbrances at January 1, 2005.