06 Feb A successful businessman in the community has cont
A successful businessman in the community has contacted the Moose County Board of Commissioners about donating income producing securities to the County to support a particular activity. Under the agreement, the County would be required to maintain the principal amount of the gift but could use the resulting earnings. The following events occurred in 2012:1. Securities, which had an original cost of $4,250,000 were donated to the County on January 1. The fair value of the securities at that date was $5,790,000, including: Corporate equities of $2,700,000. Corporate bonds of $3,000,000. Accrued interest receivable on the bonds of $90,000.2. During the year the fund received $240,000 in interest payments on the bonds. At the end of the year, accrued interest on the bonds totaled $85,000.3. During the year the fund received dividends on the corporate equities of $108,000.4. During the year the fund paid $297,000 supporting activities identified in the trust agreement and had outstanding bills to be paid of $2,500. 5. The fair value of the securities at December 31 was: Corporate equities of $2,550,000. Corporate bonds of $3,190,000.Required: You are to prepare financial statements for the fund. In Part 1 the activities supported by the fund benefit the citizenry in general. In Part 2, the activities benefit only selected individuals.Part 1 Assume it is appropriate to report the gift and related transactions in a Permanent Fund following modified accrual basis statements. Using the Excel template provided:a. Prepare journal entries recording the events above.b. Post the journal entries to T-accounts.c. Prepare closing entries.d. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance and a Balance Sheet (assume spendable net resources are to be classified as restricted for other purposes)Part 2 Assume it is appropriate to report the gift and related transactions in a Private Purpose Trust Fund following the accrual basis. Using the Excel template provided:a. Prepare journal entries recording the events above.b. Post the journal entries to T-accounts.c. Prepare closing entries.d. Prepare a Statement of Changes in Fiduciary Net Assets and a Statement of Fiduciary Net Assets.The Excel template contains separate tabs for (1) permanent fund journal entries and T-accounts, (2) private-purpose trust fund journal entries and T-accounts, (3) closing entries, (4) permanent fund financial statements, and (5) private-purpose trust fund financial statements. Both the T-accounts and financial statements may contain accounts you will not need.
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