Question

In: Accounting

On 1-1-01, the City of Midville received $100,000 from a citizen, who specifies the principal amount...

On 1-1-01, the City of Midville received $100,000 from a citizen, who specifies the principal amount should remain intact. Earnings on the principal are to be used for park beautification projects and upkeep.

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Required:

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Record the following events in the appropriate Permanent Fund and Special Revenue Fund, as necessary.

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a.	The deposit is made of the cash received.
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b.	The cash is invested in marketable securities.
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c.	Total interest accrued on investments for the year is $8,000; A liability is established in the permanent fund for what is owed to special revenue fund.
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d.	The interest is collected and transferred to the appropriate special revenue fund.
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e.	Park Operating expenses are $2,500; $5,500 is spent on new park benches.

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Required:

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Using this information, make the necessary entries in all other affected funds or groups and identify the fund for each event. If no other fund or group is affected, so note. Closing entries are not required.

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a.		?	?
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?	?	?	?
b.		?	?
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?		?
?	?	?	?
c.		?	?
?			?
?		?
?			?
?		?
?		?	?
?			?
?		?	?
?		?
?	?	?	?
d.		?	?
?			?
?		?
?			?
?		?
?		?	?
?			?
?		?
?	?	?	?
e.		?	?
?			?
?		?

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Problem IV: - 50 Points

Expert Solution

Dear Friend,

The Following are the Journal Entries:

A. The deposit is made of the cash received - Recorded in Permanent Fund

Ledger Accounts	Debit	Credit
Cash	$ 100,000
Fund Balance - Permanent Fund		$ 100,000

B. The cash is invested in marketable securities - Recorded in Permanent Fund

Ledger Accounts	Debit	Credit
Investments	$ 100,000
Cash		$ 100,000

C. Total interest accrued on investments for the year is $8,000; A liability is established in the Permanent Fund for what is owed to Special Revenue Fund - Recorded in Permanent Fund

Ledger Accounts	Debit	Credit
Investments	$ 8,000
Interest on Investments		$ 8,000

D. The interest is collected and transferred to the appropriate special revenue fund - Recorded in Special Revenue Fund

Ledger Accounts	Debit	Credit
Cash	$ 8,000
Fund Balance - Special Revenue Fund		$ 8,000

E. Park Operating expenses are $2,500; $5,500 is spent on new park benches - Recorded in Special Revenue Fund

Ledger Accounts	Debit	Credit
Fund Balance - Special Revenue Fund	$ 8,000
Park Operating Expenses		$ 2,500
New Park Benches		$ 5,500

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