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A citizen group raised funds to establish an endowment for the Eastville City Library. Under the terms of the trust agreement, the principal must be

A citizen group raised funds to establish an endowment for the Eastville City Library. Under the terms of the trust agreement, the principal must be maintained, but the earnings of the fund are to be used to purchase database and periodical subscriptions for the library. A preclosing trial balance of the library permanent fund follows:

Trial BalanceDecember 31, 2020 Debits Credits

Cash $18,500

Investments 558,000

Additions to permanent endowments $540,000

Investment income 78,000

Expendituressubscriptions 59,500

Net increase in fair value of investments 18,000 Accrued interest receivable 7,000

Accounts payable 7,000

$643,000 $643,000

Prepare any closing entries necessary at year-end.

b.Prepare Statement of Revenues, Expenditures, and Changes in Fund Balance for the library permanent fund.

c.Prepare balance sheet for the Library Permanent Fund (UseRestricted to Subscriptionsfor any spendable fund balance).

Transaction List:

Record the closing entry to transfer revenue and expenditure to fund balance.

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