(Journal entries and financial statements for an Investment Trust Fund) The City of Titanville established an Investment Trust Fund for Bay Town and Valley City. The cities contributed $\$ 200,000$ and $\$ 100,000$, respectively, to the fund. During 2004 the following transactions took place:

1. Bay Town contributed certificates of deposit (CDs) valued at $\$ 200,000$, and Valley City contributed $\$ 100,000$ to the fund.

2. The cash contributed by Valley City was invested in U.S. government securities.

3. The CDs matured. The principal was $\$ 70,000$. Interest on the CDs was $\$ 3,000$.

4. The principal amount received in part (3) was reinvested in municipal bonds.

5. The fund incurred internal administrative expenses totaling $\$ 700$, of which $\$ 500$ was paid in cash.

6. The General Fund charged the Investment Trust Fund $\$ 500$ for managing the investments. This amount was paid in cash.
7. The trust fund income of $\$ 1,800(\$ 3,000-\$ 700-\$ 500)$ was distributed as provided in the trust agreement: two-thirds to Bay Town and one-third to Valley City.