Problem 1: capital projects fund financial statement and other questions

Pinehurst County established a capital projects fund at the beginning of 2022 to construct a courthouse on land owned by the County. The estimated cost of the courthouse is $3,500,000. Construction will be financed in the following manner:

• Grant from the State $ 500,000
• Issuance of general obligation serial bonds 3,000,000

The following events relate to the County courthouse capital project:

• County trustees approved the capital budget for the courthouse on January 5, 2022.
• The referendum to issue $3,000,000 of general obligation bonds received voter approval in November, 2021. The bonds were issued for $3,060,000 on January 31, 2022. The County trustees decided to leave the bond premium in the capital projects fund in case there was a cost overrun to build the courthouse.
• In early February, 2022, the architectural firm of Hudson and Judson was selected to draw the plans for the courthouse for a fee of $40,000. Plans were submitted in March, 2022, and the architectural firm was paid $40,000 on April 18, 2022.
• Pinehurst received the $500,000 grant from the State on April 11, 2022.
• Pinehurst County signed a contract with Gleeson Construction for $3,475,000 in June, 2022.

It was estimated that it will take 12 months to complete construction of the courthouse.

• In November, 2022, Pinehurst County received a bill from Gleeson Construction for

$1,390,000. Gleeson estimated that the courthouse was 40% complete.

• In December, 2022, Gleeson and the County Trustees renegotiated the remaining 60% of

the construction contract due to higher than expected labor costs. Both parties agreed

to increase the unfulfilled portion of the construction contract from $2,085,000 to $2,125,000.

• On December 30, 2022. Gleeson was paid the amount billed less a retainage of 10%.
• $2,250,000 was invested in short-term treasury bills on December 31, 2022.

Required:

1. Prepare, in good form, the statement of revenues, expenditures, and changes in fund balance for the County courthouse capital projects fund for the year ended December 31, 2022.
2. Prepare, in good form, the balance sheet at December 31, 2022.
3. In the notes to the 2022 financial statements, how will the construction expenditures be reported in the capital asset note?