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1. The contribution of $3,700,000 was received and recorded on December 31, 2022. 2. On December 31, 2022, the city purchased a certificate of deposit in the amount of $3,000,000 that yields 3 percent per year payable on June 30 and December 31. On that date, the city also purchased bonds having a face value of $600,000 for $626,300. The bonds mature on July 1, 2031 (102 months from the date of purchase) and pay interest of 4 percent per year semiannually on June 30 and December 31. Assume the interest payment for December 31, 2022, was paid to the previous owner prior to the city's purchase of the bonds. 3. On June 30, 2023, interest on the certificate of deposit and the bonds was received by the endowment fund. 4. Interest from both the certificate of deposit and the bonds was transferred to the Ponce de Leon Fountain Maintenance Fund. 5. On June 30, 2023, the market value of the bonds was $631,600. The value of the certificate had not changed.

1. The contribution of $3,700,000 was received and recorded on December 31, 2022. 2. On December 31, 2022, the city purchased a certificate of deposit in the amount of $3,000,000 that yields 3 percent per year payable on June 30 and December 31. On that date, the city also purchased bonds having a face value of $600,000 for $626,300. The bonds mature on July 1, 2031 (102 months from the date of purchase) and pay interest of 4 percent per year semiannually on June 30 and December 31. Assume the interest payment for December 31, 2022, was paid to the previous owner prior to the city's purchase of the bonds. 3. On June 30, 2023, interest on the certificate of deposit and the bonds was received by the endowment fund. 4. Interest from both the certificate of deposit and the bonds was transferred to the Ponce de Leon Fountain Maintenance Fund. 5. On June 30, 2023, the market value of the bonds was $631,600. The value of the certificate had not changed.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ee.106.

 

Jacqueline Ponce de Leon, a descendent of Juan Ponce de Leon, made a cash contribution of $3,700,000 to the City of Fountains to create and maintain a large fountain in front of City Hall in honor of her ancestor. The city created the Ponce de Leon Endowment Fund to account for the endowment, which requires the city to invest and conserve the principal amount of the contribution in perpetuity. Earnings must be used to maintain and operate the fountain in a "pristine manner. Any changes in fair value are treated as adjustments of fund balance of the permanent fund and do not affect earnings. Earnings are transferred each year to the Ponce de Leon Fountain Maintenance Fund, a special revenue fund. Information pertaining to transactions of the endowment and special revenue funds for the fiscal year ended June 30, 2023, follows. 1. The contribution of $3,700,000 was received and recorded on December 31, 2022. 2. On December 31, 2022, the city purchased a certificate of deposit in the amount of $3,000,000 that yields 3 percent per year payable on June 30 and December 31. On that date, the city also purchased bonds having a face value of $600,000 for $626,300. The bonds mature on July 1, 2031 (102 months from the date of purchase) and pay interest of 4 percent per year semiannually on June 30 and December 31. Assume the interest payment for December 31, 2022, was paid to the previous owner prior to the city's purchase of the bonds. 3. On June 30, 2023, interest on the certificate of deposit and the bonds was received by the endowment fund. 4. Interest from both the certificate of deposit and the bonds was transferred to the Ponce de Leon Fountain Maintenance Fund. 5. On June 30, 2023, the market value of the bonds was $631,600. The value of the certificate had not changed. a. Prepare in general journal format the entries required in the Ponce de Leon Endowment Fund to record the transactions occurring during the fiscal year ending June 30, 2023, including all appropriate adjusting and closing entries. (Note: Ignore related entries in the governmental activities journal at the government-wide level and the Fountain Maintenance Fund.) (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No A B C D E F G Event 1 2 3 4 5 6 7 Cash Revenues-Contributions for Endowment Investment in Bonds Certificate of Deposit Cash General Journal Cash Revenues-Investment Earnings-CD Revenues-Investment Earnings-Bonds Other Financing Uses-Interfund Transfers Out Cash Investment in Bonds Revenues Change in Fair Value of Investments No Journal Entry Required Revenues-Contributions for Endowment Revenues-Change in Fair Value of Investments Revenues-Investment Earnings-CD Revenues-Investment Earnings-Bonds Other Financing Uses-Interfund Transfers Out Fund Balance-Nonspendable Principal of Endowment Debit 3,700,000 626,300 3,000,000 57,000 57,000 5,300 3,700,000 5,300 45.000 12,000 Credit 3,700,000 3,626,300 45,000 12,000 57,000 5,300 57,000 3,705,300
Transcribed Image Text:Jacqueline Ponce de Leon, a descendent of Juan Ponce de Leon, made a cash contribution of $3,700,000 to the City of Fountains to create and maintain a large fountain in front of City Hall in honor of her ancestor. The city created the Ponce de Leon Endowment Fund to account for the endowment, which requires the city to invest and conserve the principal amount of the contribution in perpetuity. Earnings must be used to maintain and operate the fountain in a "pristine manner. Any changes in fair value are treated as adjustments of fund balance of the permanent fund and do not affect earnings. Earnings are transferred each year to the Ponce de Leon Fountain Maintenance Fund, a special revenue fund. Information pertaining to transactions of the endowment and special revenue funds for the fiscal year ended June 30, 2023, follows. 1. The contribution of $3,700,000 was received and recorded on December 31, 2022. 2. On December 31, 2022, the city purchased a certificate of deposit in the amount of $3,000,000 that yields 3 percent per year payable on June 30 and December 31. On that date, the city also purchased bonds having a face value of $600,000 for $626,300. The bonds mature on July 1, 2031 (102 months from the date of purchase) and pay interest of 4 percent per year semiannually on June 30 and December 31. Assume the interest payment for December 31, 2022, was paid to the previous owner prior to the city's purchase of the bonds. 3. On June 30, 2023, interest on the certificate of deposit and the bonds was received by the endowment fund. 4. Interest from both the certificate of deposit and the bonds was transferred to the Ponce de Leon Fountain Maintenance Fund. 5. On June 30, 2023, the market value of the bonds was $631,600. The value of the certificate had not changed. a. Prepare in general journal format the entries required in the Ponce de Leon Endowment Fund to record the transactions occurring during the fiscal year ending June 30, 2023, including all appropriate adjusting and closing entries. (Note: Ignore related entries in the governmental activities journal at the government-wide level and the Fountain Maintenance Fund.) (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No A B C D E F G Event 1 2 3 4 5 6 7 Cash Revenues-Contributions for Endowment Investment in Bonds Certificate of Deposit Cash General Journal Cash Revenues-Investment Earnings-CD Revenues-Investment Earnings-Bonds Other Financing Uses-Interfund Transfers Out Cash Investment in Bonds Revenues Change in Fair Value of Investments No Journal Entry Required Revenues-Contributions for Endowment Revenues-Change in Fair Value of Investments Revenues-Investment Earnings-CD Revenues-Investment Earnings-Bonds Other Financing Uses-Interfund Transfers Out Fund Balance-Nonspendable Principal of Endowment Debit 3,700,000 626,300 3,000,000 57,000 57,000 5,300 3,700,000 5,300 45.000 12,000 Credit 3,700,000 3,626,300 45,000 12,000 57,000 5,300 57,000 3,705,300
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