The Michago School District has a non-expendable trust fund that was established by the donation of

$2,000,000 from the will of Marian Cooper. Income, to be deposited in an expendable trust fund, is to be used to promote fine arts in the school district. Assume that the principal amount was invested (7/1) to yield an annual rate of 3 percent. In addition, assume that on 6/30 of the following year, $100,000 was used to purchase new theater seating.

Instructions:

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Record the receipt of the principal amount of the non-expendable trust fund. Record the collection of interest for the first year in the expendable trust fund. Prepare end-of-the-year reports in the non-expendable and expendable trust funds at the end of the second year.