A $30 million contract is awarded by a county for construction of a building. Bonds are issued to finance construction, in the amount of $30 million. During the first year, contractors bill the county $22 million for work done, and $20 million is paid in cash to contractors. At year-end, the capital projects fund reports the following fund balances:

Question

Quizplus · Accepted Answer

The capital projects fund would report $8 million as restricted because that is the amount of bond proceeds remaining to be used for the construction project ($30 million - $22 million billed = $8 million remaining). The difference between what was billed and what was paid ($22 million billed - $20 million paid = $2 million) does not change the classification of the remaining funds; it merely represents an outstanding payable.

A $30 Million Contract Is Awarded by a County for Construction