The citizens of Spencer County approved the issuance of $2,000,000 in 6 percent general obligation bonds to finance the construction of a courthouse annex. A capital projects fund was established for that purpose. The preclosing trial balance of the courthouse annex capital project fund follows:

Trial BalanceDecember 31, 2017	Debits				Credits
Cash	$	900,000
Contract payable					$	545,000
Due from state government		185,000
Encumbrances		100,000
Expenditurescapital		1,845,000
Intergovernmental grant						385,000
OFS: premium on bonds						50,000
OFS: proceeds sale of bonds						2,000,000
Budgetary fund balance Reserve for encumbrances						100,000
OFU: Transfer out		50,000
	$	3,080,000			$	3,080,000

Required: a. Prepare any closing entries necessary at year-end.

b. Record the entry to transfer fund balance to reserve.