A citizen group raised funds to establish an endowment for the Eastville City Li

Question

A citizen group raised funds to establish an endowment for the Eastville City Library. Under the terms of the trust agreement, the principal must be maintained, but the earnings of the fund are to be used to purchase database and periodical subscriptions for the library. A preclosing trial balance of the library permanent fund follows Trial Balance-December 31, 2017 Cash Investments Additions to permanent endowments Investment income Expenditures-subscriptions Intergovernmental grant Net increase in fair value of investments Accrued interest receivable Accounts payable Debits Credits $ 8,500 518,000 $ 510,000 48,000 39,500 8,000 2,000 2,000 $ 568,000 $ 568,000 Required a. Prepare any closing entries necessary at year-end b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the library permanent fund c. Prepare a balance sheet for the Library Permanent Fund (Use Assigned to Library for any spendable fund balance).

Explanation / Answer

Journal entries Particulars Debit Credit Revenue: addition to permanent endowment $               5,10,000.00 Revenue investment income $                   48,000.00 revenue : increase in fair value of investment $                     8,000.00 expenditure - subscription $             39,500.00 fund balance $          5,26,500.00 Statement of revenue , expenditure , and changes in fundbalance Particulars Amount Revenue Addition to permanent endownment $               5,10,000.00 investment income $                   48,000.00 increase in fair value of investement $                     8,000.00 total revenue $               5,66,000.00 Expenditure library subsription $                 -39,500.00 net change in fund balance $               5,26,500.00 beginning fund balance 0 ending fund balance $               5,26,500.00 Balance sheet assets Amount Cash $                     8,500.00 investments $               5,18,000.00 accrued interest receivable $                     2,000.00 total assets $               5,28,500.00 laibilities and fund balance laibilities   accounts payable $                     2,000.00 fund balance non spendable permanent fund principal $               5,10,000.00 assigned to library( 526500-510000) $                   16,500.00 total fund balance $               5,26,500.00 total laibilities and fund balance $               5,28,500.00

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