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	Debits				Credits
Cash	$	9,000
Investments		520,000
Additions to permanent endowments					$	511,500
Investment income						49,500
Expenditures—subscriptions		40,500
Intergovernmental grant
Net increase in fair value of investments						8,500
Accrued interest receivable		2,250
Accounts payable						2,250
	$	571,750			$	571,750

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).

Answer 1

Journal entries
Particulars			Debit	credit
Revenue addition to permanent endowment			$        5,11,500.00
revenue investment income			$           49,500.00
revenue increase in fair value of investment			$              8,500.00
Expenditure - subscription				$     40,500.00
Fund balance				$ 5,29,000.00
Statement of revenue , expenditure and changes in fund balance
Particulars			Amount
Revenue
addition to permanent endownment			$        5,11,500.00
investment income			$           49,500.00
increase in fair value of investment			$              8,500.00
total revenue			$        5,69,500.00
expenditure
library subscription			$          -40,500.00
net change in fund balance			$        5,29,000.00
Beginning fund balance			$                           -
ending fund bnalance			$        5,29,000.00
Balance sheet
assets			amount
cash			$              9,000.00
investments			$        5,20,000.00
accrued interest receivable			$              2,250.00
total assets			$        5,31,250.00
laibilities & fund balance
laibilities
accounts payable			$              2,250.00
fund balance
non spendable permanent fund principal			$        5,11,500.00
assigned to library (529000-511500)			$           17,500.00
total fund balance			$        5,29,000.00
total laibilities & fund balance			$        5,31,250.00