Question

The City of Sweetwater maintains an Employees’ Retirement Fund, a single employer defined benefit plan that provides annuity and disability benefits. The fund is financed by actuarially determined contributions from the city’s General Fund and by contributions from employees. Administration of the retirement fund is handled by General Fund employees, and the retirement fund does not bear any administrative expenses. The Statement of Fiduciary Net Position for the Employees’ Retirement Fund as of July 1, 2016, is shown here:

CITY OF SWEETWATER
Employees’ Retirement Fund
Statement of Fiduciary Net Position
As of July 1, 2016
Assets
Cash	$	139,000
Accrued Interest Receivable		58,600
Investments, at Fair Value:
Bonds		4,508,000
Common Stocks		1,310,000
Total Assets		6,015,600
Liabilities
Accounts Payable and Accrued Expenses		351,800
Fiduciary Net Position Restricted for Pensions	$	5,663,800

During the year ended June 30, 2017, the following transactions occurred:

1. The interest receivable on investments was collected in cash.
2. Member contributions in the amount of $276,500 were received in cash. The city’s General Fund also contributed $810,000 in cash.
3. Annuity benefits of $738,000 and disability benefits of $166,000 were recorded as liabilities.
4. Accounts payable and accrued expenses in the amount of $959,000 were paid in cash.
5. Interest income of $246,000 and dividends in the amount of $30,500 were received in cash. In addition, bond interest income of $54,000 was accrued at year-end.
6. Refunds of $88,000 were made in cash to terminated, nonvested participants.
7. Common stocks, carried at a fair value of $509,000, were sold for $485,000. That $485,000, plus an additional $314,000, was invested in stocks.
8. At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $50,000; the fair value of bonds had increased by $43,000.
9. Nominal accounts for the year were closed.

Prepare a Statement of Fiduciary Net Position for the Employees’ Retirement Fund as of June 30, 2017.

Please give explanations of answers.

Answer 1

Statement of Fiduciary Net Position for the Employees’ Retirement Fund
Balance as on JUNE 30, 2017	($)	Note no.
Asset
cash	199600	1
Accrued interest	54000	5
Investment at fair value
Bonds	4551000	6
Common stock	1550000	4
Total Asset	6354600
Liabilities
accounts payable and accrued expense	296800	3
Fiduciary net position restricted to pension	6057800	7
Total Liability	6354600

Note no 1
Cash Account for the period
Receipts	Amount	Payments	Amount
opening balance	139000	account payable	959000
accrued interest received	58600	refund non int pension	88000
member contribution	276500	investment in common stock	799000
interest received	246000
dividend received	30500
contribution of general fund	810000
sale of Common stock	485000
		By Balance C/d	199600
	2045600		2045600
Note no 2
Profit and Loss Account for understanding purpose
Particulars	Amount	Particulars	Amount
		by member contribution	276500
annuity benefit	738000	general fund contribution	810000
disability	166000
payment for Provision not made	88000
to loss on sale of stock (**)	24000	increase in valuation of bond	43000
loss of stock(*)	50000	interest received	246000
		dividend received	30500
		accrued interest	54000
		Net loss	-394000
	1066000		1066000
Note no 3
Accounts payable & Accrued expenses
particulars	Amount	particular	Amount
amount paid to liability	959000	opening balance	351800
		annuity liability	738000
		disability liability	166000
closing balance	296800
	1255800		1255800
Note no 4
Investment(common stock)
particulars	Amount	particular	Amount
opening balance	1310000	sale of investment	485000
new invetment	799000	loss on sale of investment(**)	24000
		loss of value(*)	50000
		closing balance	1550000
	2109000		2109000
Note no 5
Accrued interest
particulars	Amount	particular	Amount
opening balance	58600	cash	58600
new Accrued int	54000
		closing balance	54000
	112600		112600
Note no 6
Investment(Bonds)
particulars	Amount	particular	Amount
opening balance	4508000
increase in value	43000
		closing balance	4551000
	4551000		4551000
Note no 7
Fiduciary net position restricted to pension
particulars	Amount	particular	Amount
		opening balance	5663800
		P&L Account(***)	394000
closing balance	6057800
	6057800		6057800

	Additional Notes :
*	Amount of 50000 is deducted from the common stock because of value of stock pension plan has decrease by 50000
**	Loss on sale of investment is calculated 24000 i.e (509000-485000=24000)
***	P& L balance is added in right side of Note 7 because it is negative