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 $2,115,000.

• 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.

1. In the notes to the 2022 financial statements, how will the construction expenditures be reported in the capital asset note?

Fund balance - restricted

Beginning balance:

increase:

Decrease:

$Ending balance: