Scofield City received a donation from the estate of the late Lisa O’Reilly to be used to support the city’s public library. The gift consisted of $200,000 cash and a portfolio of securities with a market value of $350,000. 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 newly renamed O’Reilly 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 $78,000.

e) Sold some of the securities that were acquired in transaction (c) for $53,000. They were acquired at a price of $55,000.

f) The portfolio of securities at year-end had a market value of $432,000.

g) Closed the fund’s revenue and expense accounts and transferred the amount available for expenditure to the appropriate fund. Close the transfer account.

Answer rating: 100% (QA)

Solution Date Particularz Debit l4 Gedit 4 Cash 200 000 Securetler 250000 Permanent ... View the full answer