The City of St

question 69

Essay

The City of St.Michael received a gift of $2,000,000 from a local resident on April 1,2012 and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city cemetery.The following transactions took place during the year ended December 31,2012.
(a)The gift was recorded on April 1.
(b)On April 1,2012,XYZ Company bonds were purchased in the amount of $2,000,000,at par.The bonds carry an annual interest rate of 5 percent,payable semiannually on October 1 and April 1.
(c)On October 1,the semiannual interest was received.
(d)From October 1 through December 1,payments were made totaling $39,400 to a lawn service.
(e)On December 31,an accrual was made for interest.
(f)Also,on December 31,a reading of the financial press indicated that XYZ bonds had a fair value of $1,985,000,exclusive of accrued interest.
(g)The books were closed.
Required:
A.Record the transactions on the books of the Cemetery Perpetual Care Fund.
B.Prepare a separate Statement of Revenues,Expenditures,and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31,2012.
C.Prepare the Balance Sheet for the Cemetery Perpetual Care Fund for the year ended December 31,2012

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Definitions:

Sigmoid Colon

The part of the large intestine that is closest to the rectum and anus.

Transverse Colon

The middle part of the large intestine, passing across the abdomen from right to left below the stomach.

Descending Colon

The part of the large intestine that descends from the splenic flexure to the sigmoid colon, involved in water and electrolyte absorption.

Hypopharynx

The lower part of the pharynx (throat) that lies just above the esophagus and larynx, important in the process of swallowing.