Question

Please bold answer in explanation

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: Credits $ Debits 15,000 544,000 Trial Balance-December 31, 2020 Cash Investments Additions to permanent endowments Investment income Expenditures-subscriptions Net increase in fair value of investments Accrued interest receivable Accounts payable $ 529,500 67,500 52,500 14,500 5,250 5,250 $ 616,750 $ 616,750 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 Restricted to Subscriptions for any spendable fund balance).

Answer 1

Answer:

1) Journal Entry ;-

Particulars	Debit($)	Credit($)
Revenues-Additions to permanent endowments A/c Dr.	529500
Revenues-Investment Income A/c Dr.	67500
Revenues-Increase in fair value of investments A/c Dr.	14500
To Expenditures-Subscriptons		52500
To Fund Balance		559000

2) Statments of Revenues, Expenditures and Changes in Fund Balance :-

Particulars	Amount($)
Revenues :-
Additions to permanent endowments	529500
Investment Income	67500
Increase in fair value of investments	14500
Total Revenues	611500
Expenditures :-
Library Subscriptions	(52500)
Net Change in Fund Balance	559000
Beginning Fund Balance	0
Ending Fund Balance	559000

3) Balance sheet :-

Assets	Amount($)
Cash	15000
Investments	544000
Accrued Interest Receivable	5250
Total Assets	564250
Liabilities and Fund Balance
Liabilities :-
Accounts Payable	5250
Fund Balance :-
Non-spendable - Permannt fund principal	529500
Assigned to library ($559000-$529500)	29500
Total Fund Balance	559000
Total Liabilities and Fund Balance	564250