The City of Malcolm has a recreation center that is partially supported by the earnings from a nonexpendable trust, the Joshua Malcolm Endowment Fund (named after its benefactor). The principal of the trust consists largely of an office building. By terms of

The trust, all cash operating expenses, necessary maintenance, and improvements to keep the building attractive to desirable tenants, depreciation, and debt service are deducted from gross rentals to determine the net income to be transferred tothe RecreationCenter Operating Fund. The fiscal year of the City ends on March 31; the Balance Sheet of the non expendable trust fund as of March 31, 19x4, was as follows:

Current Assets: Cash

Rents Receivable

Total Current Assets

Property and Equipment: Land

Building

Less: Accumulated Depreciation

Equipment

Less: Accumulated Depreciation

Total Property and Equipment Total Assets

$ 20.000 40,000

240,000

60,000

Liabilities:

Current Liabilities:

Due to Recreation Center Operating Fund Accrued Supplies Expenses

Deferred Rent Revenue

Current Portion of Mortgage Payable Total Current Liabilities

Long-Term Debt: Mortgage Payable

Total Liabilities

Fund Equity: Fund Balance

Total Liabilities and Fund Equity:

CITY OF MALCOLM Joshua Malcolm Endowment Fund Balance Sheet

As ofMarch 31, 19x4

Assets

Liabilities and Fund Equity

During fiscal year 19x5,the following transactions and events, stated ni summary form, occurred. ($40,000 of the total

1. Rentals collected in cash during the year totaled $480,000

of the total

collection of rents receivable as of April 1, 19x4; $48,000

represented rentals applicable to fiscal year 19x6). Rentals amounting to $30,000

represented i n fiscal 19x4 were earned in fiscal 19x5. In addition, rents

amounting to $20,0000 receivable at year-end.

that had been collected that should have been collected in fiscal 19x5 were still

a s o f April 1, 19x4, were paid in cash. ments during the year were for wages and salaries expense,

Other cash disburse- $105,000; supplies and

2. The Accrued expenses

and payments to

other operating expenses, $78,000 (all paid to external suppliers);

as of

Center Operating Fund, $66,000 (this included the liability

the Recreation on anticipated net income for fiscal 19x5). Payment

April 1, 19x4, and anadvance

was made during the year for mortgage

$104,000 and mortgage principal in the amount of $46,000. are deemed immaterial and thus are not reported.

3. Accrued as of March 31, 19x5, were supplies and other operating costs of $14,000. Depreciation on the building amounted to $78,000; depreciation

4. Closing entries were made in order to determine

Operating Fund for net income for fiscal 19x5. An entry was also made

the total

$2,600,000 300,000

5,000

2,300,000 60.000

interest (8% per annum) in the amount of Inventories of supplies

on the equipment amounted to $5,000. the liability to Recreation Center

to reclassify

Payable as a current liability, assuming the current portion of Mortgage in fiscal 19x6 will be $150,000-the same as fiscal

payment for principal and interest 19x5.

" Prepare the financial statements as ofMarch 31, 19x5, and for the year then ended

55,000

S 17,000 11.000 30,000

46,000

$ 104,000

1,254,000 1,358,00

1,297,00* $2,655,000

2,595,000 $2,655,000

expenses of