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The City of Melvin received a gift of $2,500,000

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The City of Melvin received a gift of $2,500,000 from a local resident on April 1, 2012 and signed an agreement that the funds would be invested on a permanent basis and the income would be used to purchase books for the city library. The following transactions took place during the fiscal year ended Dec 31, 2012.;a. The gift was recorded on the books on April 1.;b. On April 1, 2012, the PRZ Co. bonds were purchased in the amount of $2,500,000, at par. The bonds carry an annual interest rate of 5 percent, payable semiannually on October 1 and April 1.;c. On October 1, the semiannual interest was received.;d. From October 1 through December 1, payments were made totaling $35,000 to purchase books for the city library.;e. On December 31, an accrual was made for interest.;f. After a review of the bond market on December 31, 2012, the bonds had a market value of $2,511,000, exclusive of accrued interest.;g. The books were closed on December 31.;Required;a. Record the transactions on the books for Library Book Permanent Fund.;b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Library Book Permanent Fund for the year ended December 31, 2012.;c. Prepare the Balance Sheet for the Library Book Permanent Fund for the year ended December 31, 2012.

 

Paper#80587 | Written in 18-Jul-2015

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