I need the attached question answered. Thank you.See WK 4 Exercise.docx
EX. 10-3 Fiduciary funds are accounted for differently than permanent funds, even though both may account for nonexpendable resources . Christopher City received a contribution of $520,000 to provide scholarships to the children of deceased city employees. The donor stipulated that all income, including both realized and unrealized investment gains, should be used to support the beneficiaries. 1. Record journal entries for the following assuming that the gift is to be accounted for in a fiduciary (i.e., nonexpendable trust) fund. a. The gift was composed of • Cash in amount of $20,000 • Marketable securities with a fair value of $100,000 • A building with a fair value of $400,000 and an estimated useful life of forty years b. The city leased the office as office space to Brooks Law Firm. It collected $46,000 in rent and incurred expenses (other than depreciation) of $15,000. The city records depreciation on the straight-line basis. c. The city sold $20,000 of the equity securities for $26,000. At year-end the remaining securities had a market value of $97,000. d. It earned and received dividends of $5,000. 2. The city closed the fund’s revenue and expense accounts and distributed to beneficiaries the total amount available for distribution. It then closed the distribution account. Prepare the entries to make the distribution and close the accounts. 3. Prepare the fund’s year-end balance sheet. 4. How would the fund be reported in the city’s government-wide statements? Explain. 5. Suppose the trust was established to benefit programs and activities of the city itself. In what type of fund would it be accounted for? What would be the main differences in accounting principles? How would it be reported in the city’s government-wide statements? EX. 10-4 Investment gains and losses may have to be accounted for differently in nonexpendable than in expendable funds . The McCracken County Humane Society (MCHS), which is part of a county’s reporting entity, established a permanent fund to provide support for its pet neutering program. As of the start of the year, the fund had a balance of $600,000, composed of both cash and marketable securities. The program itself, which is accounted for in a special revenue fund, is funded by both direct contributions and the income from the permanent fund. At the start of the year, the special revenue fund had assets (all investments) of $26,000. The following transactions and events occurred in a recent year. 1. The MCHS conducted a Walk Your Pet Day fundraising drive. The event raised $120,000, of which $20,000 was in pledges expected to be collected shortly after
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Posted 14 Dec 2017 02:12 PM
My Price 10.00
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