Encumbrances are recorded in a capital projects fund similar to a general fund. Wickliffe County authorized the issuance of bonds and contracted with the USA Construction Company (UCC) to build a new sports complex. During 2017, 2018, and 2019, the county engaged in the transactions that follow. All were recorded in a capital projects fund. 1. In 2017, the county issued $310 million in bonds (and recorded them as "bond proceeds," an account comparable to a revenue account). 2. It approved the sports complex contract for $310 million and encumbered the entire amount. 3. It received from UCC an invoice for construction to date for $114 million, an amount that the county recognized as an expenditure. 4. It paid UCC the amount owed. 5. In 2018, it received from UCC an invoice for an additional $190 million. 6. It paid the amount in full. 7. In 2019, UCC completed the sports facility and billed the county an additional $7 million. The county approved the additional costs, even though the total cost was now $311 million, $1 million more than initially estimated. 8. The county transferred $1 million from the general fund to the capital projects fund. 9. The county paid the $7 million. a. Prepare the journal entries, including closing entries, to record the transactions in the capital projects fund. Assume that expenditures do not have to be appropriated each year. Hence, the county need not reestablish encumbrances at each year subsequent to the first. Instead, it can close the expenditures of the second and third years to reserve for encumbrances rather than fund balance. Encumbrance accounting has no lasting impact on fund balance. London Township began Year 1 with a balance of $10 million in its bridge repair fund, a capital projects fund. The fund balance is classified as restricted. At the start of the year, the governing council appropriated $6 million for the repair of two bridges. Shortly thereafter, the town signed contracts with a construction company to perform the repairs at a cost of $3 million per bridge. During the year, the town received and paid bills from the construction company as follows: - \$3.2 million for the repairs on Bridge 1. The company completed the repairs, but owing to design changes approved by the town, the cost was $0.2 million greater than anticipated. The town did not encumber the additional \$0.2 million. - \$2.0 million for the repairs, which were not completed, on Bridge 2. At the start of the following year, the governing council reappropriated the $1 million to complete the repairs on Bridge 2. During that year, the town received and paid bills totaling $0.7 million. The construction company completed the repairs, but the final cost was less than anticipated-a total of only $2.7 million. 1. Prepare journal entries to record the events and transactions over the two-year period. Include entries to appropriate, reappropriate, encumber, and reencumber the required funds; to record the payment of the bills; and to close the accounts at the end of each year. 2. Determine the restricted fund balance at the end of the second year. Is it equal to the initial fund balance less the total cost of the repairs? Encumbrances have an impact on unassigned fund balance, but do not affect total fund balance. At the start of its fiscal year on October 1, Fox County reported the following (all dollar amounts in thousands): During the year, the county (all dollar amounts in thousands): - Estimated that revenues for the year would be $6,300. - Appropriated $6,500 for operations. - Ordered goods and services estimated to cost $6,000. Of these, the county received (and used) goods and services that it had estimated would cost $5, ooo. Actual cost, however, was $5,200. - Received (and used) all goods that it ordered in the previous year. Actual cost was only $180. - Recognized actual revenues of $6,400. 1. Prepare a schedule, similar to that illustrated in the text, of changes in unassigned fund balance. 2. Show how the total fund balance (including the unassigned and committed portions) would be displayed at yearend. 3. Does the total fund balance at the beginning of the year, plus the actual revenues, minus the actual expenditures, equal the total fund balance at the end of the year