The City of Bancroft received a donation from the estate of the late Kathy Smith to be

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Question:

The City of Bancroft received a donation from the estate of the late Kathy Smith to be used to support the City Public Library. The gift consisted of $200,000 cash and a portfolio of securities with a market value of $300,000. The securities have a book value of $250,000. The donor stipulated that the principal of the gift, including investment gains (realized and unrealized) but excluding investment losses, must be kept intact. The income must be used to care for and maintain the book collection at the Smith Public Library. All appropriate costs, including investment losses, may be charged against the revenues yearly to determine the amount available for the specified purposes. During the year, the City engaged in the following transactions on behalf of the Library. Prepare the appropriate entries in the City’s permanent fund.

a) Accepted the donation

b) Received dividends and interest of $18,000

c) Purchased securities for $200,000

d) Sold securities that were part of the original gift (market value at date of gift $72,000; book value in hands of donor $68,000) for $75,000.

e) Sold some of the securities that were acquired in transaction (c) for $51,000. They were acquired at a price of $55,000.

f) The portfolio of securities at year-end had a market value of $377,000.

g) In accordance with donor stipulations, how much money can be transferred to the fund where library conservation and maintenance of collection expenditures are recorded?