PROBLEM 19-7 Investment Pool
Three funds of the Leukemia Foundation, a nonprofit welfare organization, began an investment pool on
January 1, 2016. The costs and fair market values on this date were as follows:
Market
Cost Value
Restricted fund $ 55,000 $ 70,000
Lambert endowment fund 215,000 210,000
Plant fund 200,000 220,000
Total $470,000 $500,000
During 2016 the investment pool reinvested $20,000 in realized gains and received interest of $15,000 and dividends
of $10,000. Interest and dividend income was distributed to the respective funds. The Plant Fund withdrew
from the investment pool on December 31, 2016, when the total current market value was $540,000. It distributed
securities in the amount of its percentage share.
On January 3, 2017, the Fargot Annuity Fund entered the investment pool with investments costing
$100,000 and having a current market value of $117,600. During 2017 the pool received interest of $25,000 and
dividends of $15,000, which were distributed to the participating funds. Realized gains of $30,000 were reinvested
in the pool.
Required:
A. Calculate the equity percentages of the contributing funds in the investment pool at January 1, 2016, and at
January 3, 2017.
B. Using the format shown below, prepare entries necessary on the records of the funds that contributed securities
to the investment pool to account for the earnings of the investment pool in 2016 and 2017.