A $25 million contract is awarded by a county for construction of a building. Bonds are issued to finance construction, in the amount of $25 million. During the first year, $6 million is paid in cash to contractors for work done. At year-end, the capital projects fund reports the following fund balances:

Question

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The correct answer is C) Restricted, $19 million. This is because the $25 million initially obtained from issuing bonds would be considered restricted for the construction project. After paying $6 million in cash to contractors for work done, the remaining balance that is still restricted for the project would be $19 million ($25 million - $6 million = $19 million).

A $25 Million Contract Is Awarded by a County for Construction