On July 1, 2008, the City of Smyth received a gift of debt securities of XYZ Company with a nominal value of $2,000,000. Income is to be used to make awards for civic achievements. As of the date of the gift, the securities had a market value of $2,044,000, including accrued interest of $30,000. The bonds carried an annual interest rate of 6%, payable semiannually on April 1 and October 1. During the fiscal year ended June 30, 2009, the following transactions took place:
1. The gift was received.
2. On October 1, $ \$ 60,000 $ in interest was received.
3. On April 1, $ \$ 60,000 $ in interest was received.
4. On April 1, immediately after the receipt of interest, one quarter of the $ X Y Z $ bonds were sold for $ \$ 500,000 $. The proceeds were invested in $ A B C $ bonds, which also carried a $ 6.5 \% $ annual interest rate, payable semiannually on April 1 and Oetober 1. The bonds were purchased at par value.
5. On June 30, 2009, accrued interest on both bonds was recognized.
6. On June 30, 2009, awards were made in the amount of $ \$ 100,000 $.
7. As of June 30, 2009, the fair value of the remaining XYZ bonds was $ \$ 1,513,500 $, and the fair value of the $ \mathrm{ABC} $ bonds was $ \$ 498,000 $. Both figures are exclusive of accrued interest. Required:
A. Record the above transactions on the books of the City of Smyth Private-Purpose Trust Fund.
B. Prepare a Statement of Changes in Fiduciary Net Assets for the City of Smyth Private-Purpose Trust Fund for the year ended June 30, 2009.

Question

On July 1, 2008, the City of Smyth received a gift of debt securities of XYZ Company with a nominal value of $2,000,000. Income is to be used to make awards for civic achievements. As of the date of the gift, the securities had a market value of $2,044,000, including accrued interest of $30,000. The bonds carried an annual interest rate of 6%, payable semiannually on April 1 and October 1. During the fiscal year ended June 30, 2009, the following transactions took place:
 1. The gift was received.
2. On October 1, $ \$ 60,000 $ in interest was received.
3. On April 1, $ \$ 60,000 $ in interest was received.
4. On April 1, immediately after the receipt of interest, one quarter of the $ X Y Z $ bonds were sold for $ \$ 500,000 $. The proceeds were invested in $ A B C $ bonds, which also carried a $ 6.5 \% $ annual interest rate, payable semiannually on April 1 and Oetober 1. The bonds were purchased at par value.
5. On June 30, 2009, accrued interest on both bonds was recognized.
6. On June 30, 2009, awards were made in the amount of $ \$ 100,000 $.
7. As of June 30, 2009, the fair value of the remaining XYZ bonds was $ \$ 1,513,500 $, and the fair value of the $ \mathrm{ABC} $ bonds was $ \$ 498,000 $. Both figures are exclusive of accrued interest. Required:
A. Record the above transactions on the books of the City of Smyth Private-Purpose Trust Fund.
B. Prepare a Statement of Changes in Fiduciary Net Assets for the City of Smyth Private-Purpose Trust Fund for the year ended June 30, 2009.

Quizplus · Accepted Answer

The Answer of On July 1, 2008, the City of Smyth received a gift of debt securities of XYZ Company with a nominal value of $2,000,000. Income is to be used to make awards for civic achievements. As of the date of the gift, the securities had a market value of $2,044,000, including accrued interest of $30,000. The bonds carried an annual interest rate of 6%, payable semiannually on April 1 and October 1. During the fiscal year ended June 30, 2009, the following transactions took place:
 1. The gift was received.
2. On October 1, $ \$ 60,000 $ in interest was received.
3. On April 1, $ \$ 60,000 $ in interest was received.
4. On April 1, immediately after the receipt of interest, one quarter of the $ X Y Z $ bonds were sold for $ \$ 500,000 $. The proceeds were invested in $ A B C $ bonds, which also carried a $ 6.5 \% $ annual interest rate, payable semiannually on April 1 and Oetober 1. The bonds were purchased at par value.
5. On June 30, 2009, accrued interest on both bonds was recognized.
6. On June 30, 2009, awards were made in the amount of $ \$ 100,000 $.
7. As of June 30, 2009, the fair value of the remaining XYZ bonds was $ \$ 1,513,500 $, and the fair value of the $ \mathrm{ABC} $ bonds was $ \$ 498,000 $. Both figures are exclusive of accrued interest. Required:
A. Record the above transactions on the books of the City of Smyth Private-Purpose Trust Fund.
B. Prepare a Statement of Changes in Fiduciary Net Assets for the City of Smyth Private-Purpose Trust Fund for the year ended June 30, 2009.

On July 1, 2008, the City of Smyth Received a Gift