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Annabelle Benton, great-granddaughter of the founder of the Town of Benton, made a cash contribution in the amount of $500,000 to be held as an endowment. To account for this endowment, the town has...

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Annabelle Benton, great-granddaughter of the founder of the Town of Benton, made a cash contribution in the amount of $500,000 to be held as an endowment. To account for this endowment, the town has created the Alex Benton Park Endowment Fund. Under terms of the agreement, the town must invest and conserve the principal amount of the contribution in perpetuity. Earnings, measured on the accrual basis, must be used to maintain Alex Benton Park in an “attractive manner.” All changes in fair value are treated as adjustments of fund balance of the permanent fund and do not affect earnings. Earnings are transferred periodically to the Alex Benton Park Maintenance Fund, a special revenue fund. Information pertaining to transactions of the endowment and special revenue funds for the fiscal year ended June 30, 2011, follows:1. The contribution of $500,000 was received and recorded on December 31, XXXXXXXXXXOn December 31, 2010, bonds having a face value of $400,000 were purchased for $406,300, plus three months of accrued interest of $6,000. A certificate of deposit with a face and fair value of $70,000 was also purchased on this date. The bonds mature on October 1, XXXXXXXXXXmonths from date of purchase), and pay interest of 6 percent per annum semiannually on April 1 and October 1. The certificate of deposit pays interest of 4 percent per annum payable on March 31, June 30, September 30, and December 31.3. On January 2, 2011, the town council approved a budget for the Alex Benton Park Maintenance Fund, which included estimated revenues of $13,400 and appropriations of $13,000.4. On March 31, 2011, interest on the certificate of deposit was received by the endowment fund and transferred to the Alex Benton Park Maintenance Fund.5. The April 1, 2011, bond interest was received by the endowment fund and transferred to the Alex Benton Park Maintenance Fund.6. On June 30, 2011, interest on the certificate of deposit was received and transferred to the Alex Benton Park Maintenance Fund.7. For the year ended June 30, 2011, maintenance expenditures from the Alex Benton Park Maintenance Fund amounted to $2,700 for materials and contractual services and $10,150 for wages and salaries. All expenditures were paid in cash except for $430 of vouchers payable as of June 30, 2011. Inventories of materials and supplies are deemed immaterial in amount.8. On June 30, 2011, bonds with face value of $100,000 were sold for $102,000 plus accrued interest of $1,500. On the same date, 2,000 shares of ABC Corporation’s stock were purchased at $52 per share.Required:a. Prepare in general journal form the entries required in the Alex Benton Park Endowment Fund to record the transactions occurring during the fiscal year ending June 30, 2011, including all appropriate adjusting and closing entries. (Note: Ignore related entries in the governmental activities journal at the government-wide level.)b. Prepare in general journal form the entries required in the Alex Benton Park Maintenance Fund to record Transactions 1–8.c. Prepare the following financial statements:(1) A balance sheet for both the Alex Benton Park Endowment Fund and the Alex Benton Park Maintenance Fund as of June 30, XXXXXXXXXXA statement of revenues, expenditures, and changes in fund balance for both the Alex Benton Park Endowment Fund and the Alex Benton Park Maintenance Fund for the year ended June 30, 2011.
Answered Same Day Dec 22, 2021

Solution

David answered on Dec 22 2021
116 Votes
A.
town of Benton
Alex Benton park endowment fund
General journal
For year ended June 30, 2005
Debits
credits
1.
December 31, 2010:
Cash
500,000
Revenues—contributions fo
for endowment
500,000
2.
December 31, 2010:
Investment in bonds
406,300
Accrued interest receivable
6,000
Certificate of deposit
70,000
Cash
482,300
3.
January 2, 2011:
No entry required in the endowment fund.
4.
March 31, 2011:
a.
cash

700
Revenues—investment earnings
700
.
Interfund transfers out
700
Cash
700
5.
April 1, 2011:
a.
cash
12,000
Accrued interest receivable
6,000
Revenues—investment earnings
6,000
.
Interfund transfers out
6,000
Cash
6,000
6.
June 30, 2011:
a.
cash

700
Revenues—investment earnings
700
.
Interfund transfers out
700
Cash
700
7.
June 30, 2011:
No entry required in the endowment fund.
8.
June 30, 2011:
a.
accrued interest receivable (all bonds)
6,000
Revenues—investment earnings
6,000
($400,000 x .06 x 3/12)
. investment in bonds
1,700
Revenues—change in fair value
of investments
1,700
[($400,000 x 1.02) - $406,300] = $1,700
Cash
103,500
Investment in bonds ($400,000 x 1.02 x 25%)
102,000
Accrued interest receivable (25%)
1,500
(To record sale of bonds)
c.
stocks
104,000
Cash
104,000
(To record purchase of...
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