Question
On July 1, 2019, the City of Belvedere accepted a gift of cash in the amount of $3,320,000 from a number of individuals and foundations
On July 1, 2019, the City of Belvedere accepted a gift of cash in the amount of $3,320,000 from a number of individuals and foundations and signed an agreement to establish a private-purpose trust. The $3,320,000 and any additional gifts are to be invested and retained as principal. Income from the trust is to be distributed to community nonprofit groups as directed by a Board consisting of city officials and other community leaders. The agreement provides that any increases in the market value of the principal investments are to be held in trust; if the investments fall below the gift amounts, then earnings are to be withheld until the principal amount is re-established. The following events and transactions occurred during the fiscal year ended June 30, 2020. Record them in the Belvedere Community Trust Fund:
- On July 1, the original gift of cash was received.
- On August 1, $2,204,000 in XYZ Company bonds were purchased at par plus accrued interest ($36,733). The bonds pay an annual rate of 5 percent interest semiannually on April 1 and October 1.
- On August 2, $900,000 in ABC Company common stock was purchased. ABC normally declares and pays dividends semiannually, on January 31 and July 31.
- On October 1, the first semiannual interest payment ($55,100) was received from XYZ Company. Note that part of this is for accrued interest due at the time of purchase; the remaining part is an addition that may be used for distribution.
- On January 31, a cash dividend was received from ABC Company in the amount of $25,000.
- On March 1, the ABC stock was sold for $921,000. On the same day, DEF Company stock was purchased for $976,000.
- On April 1, the second semiannual interest payment was received from XYZ Company.
- During the month of June, distributions were approved by the Board and paid in cash in the amount of $89,000.
- Administrative expenses were recorded and paid in the amount of $6,600.
- An accrual for interest on the XYZ bonds was made as of June 30, 2020.
- As of June 30, 2020, the fair value of the XYZ bonds, exclusive of accrued interest, was determined to be $2,205,000. The fair value of the DEF stock was determined to be $972,000.
- Closing entries were prepared.
Required: b. Prepare (1) a Statement of Changes in Fiduciary Net Position for the Belvedere Community Trust Fund and (2) a Statement of Fiduciary Net Position.
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