The town of Terry began 2013 with an unreserved balance of $15 million in its street repair fund, a 1 answer below »

The town of Terry began 2013 with an unreserved balance of $15 million in its street repair fund, a capital projects fund. At the start of the year, the city council appropriated $9 million to reconstruct portions of the roadbed for two of its major roadsAc€??Main Street and Koeller Avenue. Shortly after, the town signed contracts with two construction companies to perform the repairs for a total of $9 million. During the year, the town received bills from the construction companies as follows:

a.       $4.8 million for the entire cost of repairs to Main Street. This amount is $0.3 higher than expected due to design changes approved by the town. The town did not encumber the additional $0.3 million.
b.       $3.0 million, representing a progress billing for repairs to Koeller Avenue, which were not completed at the end of 2013.

At the beginning of 2014, the town reappropriated the remaining $1.5 million for the Koeller Avenue repairs. During the year, the town received this bill:

c.       $1.0 million, representing the final billing for the Koeller Avenue repairs. The final cost was $0.5 million less than anticipated.

REQUIRED:

Prepare journal entries to record the events and transactions over the two-year period. Include entries to appropriate, reappropriate, encumber, and re-encumber the required resources, to record the payment of the bills, and to close the accounts at the end of each year.

Determine the reserve for encumbrances (committed or assigned) and fund balanceAc€??unassigned for the capital projects fund at the end of the second year.