Question

On July 1, 2016, the Morgan County School District received a $51,000 gift from a local civic organization with the stipulation that, on June 30 of each year, $3,600 plus any interest earnings on the unspent principal be awarded as a college scholarship to the high school graduate with the highest academic average. A private-purpose trust fund, the Civic Scholarship Fund, was created.

1. On July 1, 2016, the gift was received and immediately invested.
2. On June 30, 2017, $3,600 of the principal was converted into cash. In addition, $2,600 of interest was received.
3. On June 30, the $6,200 was awarded to a student who had maintained a 4.0 grade point average throughout each of her four years.
4. The nominal accounts were closed.
   

Required:
a. Record the above transactions on the books of the Civic Scholarship Fund.
b. Prepare a Statement of Changes in Fiduciary Net Position for the Civic Scholarship Fund for the year ended June 30, 2017.

Answer 1

a.

Prepare the journal entries as follows:

Date	Accounts	Debit	Credit
1a	Cash	$ 51,000
	Additions- - Contributions		$ 51,000
1b	Investments	$ 51,000
	Cash		$ 51,000
2	Cash	$   6,200
	Additions- Investment earnings interest		$   2,600
	Investments		$   3,600
3	Deductions- Scholarship awards	$   6,200
	Cash		$   6,200
4	Additions- Contributions	$ 51,000
	Additions- Investment earnings-Interest	$   2,600
	Deductions- scholarship awards		$   6,200
	Fiduciary net position: Restricted for scholarship awards		$ 47,400

b.

Prepare a Statement of Changes in Fiduciary Net Position as follows:

MORGAN COUNTY SCHOOL DISTRICT
Changes in fiduciary net position
CIVIC scholarship fund
Additions:
Contributions	$ 51,000
Interest income	$   2,600
Total	$ 53,600
Deductions:
Scholarship awards	$ -6,200
Change in fiduciary net position	$ 47,400
Fiduciary net position beginning	$         -
Fiduciary net position ending	$ 47,400