Acc410 ch 10 Permanent Funds and Fiduciary Funds and 11 Issues of Reporting and Disclosure Solutio

Acc410 ch 10 Permanent Funds and Fiduciary Funds and 11 Issues of Reporting and Disclosure Solutio

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Unformatted text preview: 10-3 1. Journal entriesPrivate purpose trust fund (a) Cash $ 20,000 Marketable securities 100,000 Building 400,000 Contributions $520,000 To record assets received in trust (b) Cash $ 31,000 Operating expenses 15,000 Depreciation expense 10,000 Rent revenue $ 46,000 Buildingaccumulated depreciation 10,000 To record rental income and related expenses (c) Cash $ 26,000 Marketable securities $ 20,000 Investment income 6,000 To record the sale of equity securities (in this example, all investment income, including both realized and unrealized gains, is being credited to investment income) Marketable securities $ 17,000 Investment incomeappreciation $ 17,000 To record the appreciation of $17,000 on the remaining $80,000 of securities (d) Cash $ 5,000 Investment income $ 5,000 To record dividends 2. Closing entries Rent revenue $ 46,000 Investment income 28,000 Operating expenses $ 15,000 Depreciation expense 10,000 Income available for distribution 49,000 To close the revenue and expense accounts Scholarship Expenses $ 49,000 Cash $ 49,000 To distribute the amount available to beneficiaries Income available for distribution $ 49,000 Scholarship Expenses $ 49,000 To close the transfer account 3. Statement of fiduciary net assets Assets Cash $ 33,000 Marketable securities 97,000 Building $400,000 Less accumulated depreciation 10,000 390,000 Total assets $520,000 Liabilities Net assets $520,000 4. The fund is not reported in the government-wide statements. The resources are not intended to benefit the government itself. 5. If the trust is to benefit the city itself, it is accounted for in a permanent fund. Permanent funds are classified as governmental funds and accordingly are on a modified accrual basis. Therefore, the office building is not reported in the fund and depreciation is not charged. In the citys government-wide statements, the permanent fund is reported, like other governmental funds, in the governmental activities columns. The building is reported as a capital asset and depreciation is recognized. 10-5 1. Journal entriesPermanent Fund (Initial) Cash $4,000,000 Contributions $4,000,000 To record the initial contribution to a nonexpendable permanent fund (a) Investment in bonds $2,970,000 Cash $2,970,000 To record the purchase of bonds Investment in common stock $1,000,000 Cash $1,000,000 To record the purchase of common stock (b) Cash $ 180,000 Investment in bonds 3,000 Interest income $ 180,000 Investment gainsunrealized 3,000 To record bond interest and appreciation (c) Cash $ 550,000 Investment in common stock $ 500,000 Investment gains 50,000 To record the sale of common stock Investment in common stock $ 550,000 Cash $ 550,000 To record the purchase of common stock (d) Nonreciprocal transfer-out to special revenue fund $ 33,000 Cash $ 33,000 To record the transfer of expendable income to a special revenue fund Expendable income was determined as follows: Interest revenue $180,000 Investment gains 53,000 Total income 233,000...
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This note was uploaded on 01/04/2012 for the course ACC 410 taught by Professor Smith during the Fall '10 term at Strayer.

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Acc410 ch 10 Permanent Funds and Fiduciary Funds and 11 Issues of Reporting and Disclosure Solutio

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