Exercise 8-21 (Static) Investment Trust Fund [LO 8-3]

The Albertville City Council decided to pool the investments of its General Fund with Albertville Schools and Richwood Township in an investment pool to be managed by the city. Each of the pool participants had reported its investments at fair value as of the end of 2022. At the date of the creation of the pool, February 15, 2023, the fair value of the investments of each pool participant was as follows:

_____________________________________________________________________

a) Prepare the journal entries that should be made by the City of Albertville, Albertville Schools, and Richwood Township on February 15 to record their participation in the investment pool.

b) Prepare the journal entries to be made in the accounts of the investment pool trust fund to record the following transactions for the first year of operations:

c) Record the June 15 increase in each of the participants funds. On June 15, Richwood Township decided to withdraw $3,010,000 for a capital projects payment. At the date of the withdrawal, the fair value of the Treasury notes had increased by $30,000. Assume that the trust fund was able to redeem the CDs necessary to complete the withdrawal without a penalty but did not receive interest on the funds.

d) On June 15, Richwood Township decided to withdraw $3,010,000 for a capital projects payment. At the date of the withdrawal, the fair value of the Treasury notes had increased by $30,000. Assume that the trust fund was able to redeem the CDs necessary to complete the withdrawal without a penalty but did not receive interest on the funds. On September 15, interest on Treasury notes in the amount of $50,000 was collected. Interest on CDs accrued at year-end amounted to $28,000. At the end of the year, undistributed earnings were allocated to the investment pool participants. Assume that there were no additional changes in the fair value of investments after the Richwood Township withdrawal. Round the amount of the distribution to each fund or participant to the nearest dollar. Record the change in each participants Equity in Pooled Investment account due to the September 15 treasury interest and December 31 CD interest accrual.

_____________________________________________________________________

The red is where I think I got my work wrong

\begin{tabular}{lrc} & \multicolumn{2}{c}{ Investments } \\ \cline { 2 - 3 } City of Albertville General Fund & 12/31/22 & 2/15/23 \\ Albertville Schools & $890,000 & $800,000 \\ Richwood Township & 4,200,000 & 4,230,000 \\ Total & $8,980,0003,890,000 & $9,000,0003,870,000 \end{tabular} 2. On June 15, Richwood Township decided to withdraw $3,010,000 for a capital projects payment. At the date of the withdrawal, the fair value of the Treasury notes had increased by $30,000. Assume that the trust fund was able to redeem the CDs necessary to complete the withdrawal without a penalty but did not receive interest on the funds. 3. On September 15, interest on Treasury notes in the amount of $50,000 was collected. 4. Interest on CDs accrued at year-end amounted to $28,000. \begin{tabular}{|l|l|l|c|c|} \hline 4 & InvestmentPoolTrustFund & Accrued Interest Receivable & 28,000 & \\ \hline & & Undistributed Earnings on Pooled Investments & & \\ \hline & & & & 28,0000 \\ \hline \end{tabular} 5. At the end of the year, undistributed earnings were allocated to the investment pool participants. Assume that there were no additional changes in the fair value of investments after the Richwood Township withdrawal. Round the amount of the distribution to each fund or participant to the nearest dollar. \begin{tabular}{|c|l|l|l|l|l|l|} \hline \multicolumn{1}{|c|}{ Fransaction } & \multicolumn{1}{c|}{ General Journal } & Debit & Credit \\ \hline 1 & 1. Record the change in each participant's Equity in Pooled Investment account due to the September 15 treasury interest and December 31CD interest accrual. \\ \hline & Fund of Albertville General & Equity in Pooled Investments & Revenues-Investment Earnings \\ \hline & & & 11,700 & \\ \hline & & Albertville Schools & Equity in Pooled Investments & 11,700 \\ \hline & & Revenues-Investment Earnings & & 54,990 \\ \hline & & & Equity in Pooled Investments & Revenues-Investment Earnings & & \\ \hline & & Richwood Township & & & 11,310 \\ \hline & & & & \\ \hline \end{tabular}