The City of Sharpesburg received a gift of $1,000,000 from a local resident on June 1, 2017, and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city wildlife preserve and nature center. The following transactions took place during the year ended December 31, 2017:

1. The gift was recorded on June 1.

2. On June 1, ABC Company bonds were purchased as investments in the amount of $1,000,000 (par value). The bonds carry an annual interest rate of 3.5 percent, payable semiannually on December 1 and June 1.

3. On December 1, the semiannual interest payment was received.

4. From December 1 through December 31, $14,500 in maintenance costs were incurred; full payment was made in cash.

5. On December 31, an accrual was made for interest.

6. Also on December 31, a reading of the financial press indicated that the

ABC bonds had a fair value of $1,004,000, exclusive of accrued interest.

7. The books were closed.

Required:

a. Record the transactions on the books of the Wildlife Preserve Permanent Fund.

b. Prepare a separate Statement of Revenues, Expenditures, and Changes in Fund Balances for the Wildlife Preserve Permanent Fund for the year ended December 31, 2017.

c. How would the permanently invested resources be classified in the fund balance section of the governmental funds Balance Sheet and net position section of the government-wide Statement of Net Position?