The accompanying statements of the parks, recreations, and municipal capital improvement bond fund (a capital projects fund) were drawn from an annual report of Parkville. According to a note in the report (the only one pertaining to the fund), the fund is maintained "to account for bond proceeds to be utilized for the construction and refurbishment of parks and recreation facilities and the refurbishment of other municipal facilities."
1. The variances in expenditures between budget and actual are substantial. What is the most likely explanation?
2. A schedule of long€term debt payable (in the statistical section of the report) indicates that only $7 million, of parks, recreation, and municipal capital improvement bonds were authorized and issued. How do you reconcile that amount with the proceeds from bonds payable reported in the statement of revenues, expenditures, and changes in fund balance?
3. Another schedule of transfers between funds (in the same section) indicates that $131 thousand was transferred to the general fund. What conclusions can you draw about whether interest on fund investments must be used either to repay the capital improvement bonds or to construct and refurbish city facilities?
4. How much of fund resources did the government spend during the year on capital improvements?
5. How do you explain the absence in the balance sheet of "construction in process?"
6. Why is a major portion of the fund balance "restricted?"
Parks, Recreation, and Municipal Capital Improvement Bond Fund Balance Sheet
December 31, 2018 (in thousands)
Assets
Receivables.............................................$ 2
Investments..........................................5,874
Total assets.........................................$5,876
Liabilities and Fund Balance
Liabilities
Accrued wages and salaries..........................$ 4
Construction contracts payable.....................202
Due to other funds....................................220
Total liabilities.......................................$ 426
Fund Balance
Restricted for bond projects......................5,019
Committed..........................................$ 431
Total fund balance................................$5,450
Total liabilities and fund balance...............$5,876

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Parks, Recreation, and Municipal Capital Improvement Bond Fund Statement of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Year Ended December 31, 2018 (in thousands) Budget Actual Keventes $ 75 S 131 Interest earnings Capital outlay Culture and Total expenditures 1,552 5,500 S 7.052 s (6,977) 425 S 1,602 S (1,471) Deficiency of revenues over expenditures Other financing sources (uses) Proceeds from bonds payable Nonreciprocal transfers out Total other financing sources (uses) $ 7,052 $ 6,977 0 S 7,052 (131 Excess of revenues and other sources over expenditures and other uses Fund balance, beginning of year Fund balance, end of year 5.450 0 s 5.450