HONEY DIP:

2/3 cup honey
1/3 cup water

Combine honey and water in a small saucepan. Heat gently, stirring until well blended. Chill several hours.

DONUTS:

3 1/2 cups unsifted all-purpose flour, divided
3 tbsp. sugar
1 tsp. salt
1 pkg. yeast (or equivalent)
1 cup milk
1/4 cup water
2 tbsp. butter
2 eggs, at room temperature

In a large bowl, thoroughly mix 1 1/2 cups flour, sugar, salt and yeast.

Combine milk, water and butter in a saucepan. Heat over low heat until liquids are very warm (120°F), butter doesn't need to melt. Gradually add to dry ingredients and beat 2 minutes at medium speed of electric mixer, scraping bowl occasionally. Add eggs and 1/2 cup flour. Beat at high speed for 2 minutes, scraping bowl occasionally. Stir in enough additional flour to make a stiff batter. Cover bowl; let rise until doubled in bulk, about 1 hour.

Stir batter down. Drop by rounded teaspoonfuls into deep hot (375°F) fat. Fry a few at a time until golden brown, about 2 minutes on each side. Drain on paper towels about 1 minute. Then immerse fried doughnuts into chilled honey mixture. Drain and set on wire racks to dry.

Variation: If desired, dipped donuts may be rolled in finely chopped pecans.