Leisure City maintains a Pension Trust Fund for its employees. Following is a trial balance for the fund at December 31, 2011:

The following transactions took place during 2012:
1. Both Leisure City and its employees are required to contribute to the Employees’ Retirement Fund. The fund contributions from the General Fund totaled $ 1,000,000; included in this amount was $ 500,000 from the employees and $ 500,000 from the city.
2. The Employees’ Retirement Fund purchased CDs costing $ 600,000 and U. S. government securities costing $ 400,000.
3. The Employees’ Retirement Fund collected interest accrued as of December 31, 2011. Interest income for 2012 totaled $ 7,000,000, of which $ 6,000,000 was collected in cash.
4. The Employees’ Retirement Fund paid retirement benefits of $ 6,100,000.
5. The Employees’ Retirement Fund purchased additional U. S. government securities costing $ 200,000.
6. Costs of operating the plan were $ 180,000; of this amount $ 100,000 was paid in cash, and the remainder was accrued. The accrued expenses at the beginning of the year were also paid. These expenses were administrative in nature.
7. The Employees’ Retirement Fund redeemed for $ 510,000 CDs with a book value of $ 500,000.
8. The fair value of the corporate stocks increased by $ 50,000 by the end of 2012.
(a) The journal entries necessary to record these transactions,
(b) A statement of changes in fiduciary net position for the fund for 2012, and
(c) A statement of fiduciary net position as of December 31, 2012.
Investment Trust Fund
Leisure City established a new Investment Trust Fund to manage the investments of the cities of Odell and Whitt. The cities contributed $ 500,000 each to the fund. During 2012 the following transactions took place:
1. Leisure City received the contributions from Odell and Whitt.
2. The cash was immediately invested in U. S. government securities.
3. Some of the investments matured. The principal was $ 300,000. Interest on the securities was $ 5,000.
4. The principal amount received in the previous transaction was reinvested in municipal bonds. 5. The fund incurred internal administrative expenses totaling $ 1,000, of which $ 700 was paid in cash.
6. The Investment Trust Fund paid $ 900 to an investment adviser for managing the investments. This amount was paid in cash.
7. Accrued interest income at the end of the year totaled $ 30,000.
8. Cash in the amount of $ 1,800 was distributed as provided in the trust agreement: one- half to the City of Odell and one- half to Whitt. Prepare (a) the journal entries to record these events and transactions in the Investment Trust Fund, (b) a statement of changes in fiduciary net position for 2012, and (c) a statement of fiduciary net position as of December 31, 2012.
Agency Fund
Leisure City annually hosts a state fair. The city collects a special 1 percent sales tax levied by the county on all sales made at the fair. The proceeds of the tax and all investment income are used to provide resources to the county to build new roads. The tax is collected by Leisure City and disbursed to the county as provided in the agreement between the two. The dates of the fair spanned two fiscal periods. The following trial balance was available at the end of 2011:

The following transactions took place during 2012:
1. Investments costing $ 15,000 were redeemed for a total of $ 18,000; the difference was invest-ment revenue.
2. The Agency Fund collected $ 150,000 of sales taxes.
3. The Agency Fund distributed $ 1,000 to the county.
4. The Agency Fund collected $ 800 in interest on investments.
5. An additional $ 13,500 was paid to the county.
6. The Agency Fund paid $ 35,000 to the county.
7. The remaining investments were redeemed by the Agency Fund for $ 36,000.
8. The remaining assets in the Agency Fund were transferred to the county.
9. The Agency Fund collected $ 48,000 of sales taxes in December 2012. Prepare (a) the entries necessary for the Agency Fund during 2012 and (b) the statement of fiduciary net position for the Agency Fund at the end of2012.

  • CreatedDecember 30, 2014
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