Question

Baird County maintains an investment trust fund for the School District and the Town of Bairdville (separate governments). Presented below is the preclosing trial balance for the investment trust fund.

Trial Balance—December 31, 2017	Debits			Credits
Accrued Interest Receivable	$	22,000
Cash		36,600
Deposits—School District				$	439,200
Deposits—Town of Bairdville					320,400
Decrease in Fair Value of Investments (bonds)		14,600
Interest Income					87,600
Investments—Corporate Bonds		1,504,000
Investments—U.S. Treasury Securities		1,460,000
Net Position held in trust—School District (Jan. 1)					1,460,000
Net Position held in trust—Town of Bairdville (Jan. 1)					730,000
	$	3,037,200		$	3,037,200

  
Investment earnings are distributed among the School District and Town in proportion to the amounts contributed (two-thirds to the School District and one-third to the Town).

Required:
Prepare the year-end closing entries and a Statement of Changes in Fiduciary Net Position for the year ended December 31, 2017.

Answer 1

CR Journal entry Particulars Deposits from School Borad Deposits from Town of Bairdville Interest income Decrease in fair value of investments Net position held in trust-School district Net position held in trust- Town of Bairdsville DR $4,39,200.00 $3,20,400.00 $ 87,600.00 $ 14,600.00 $ 5,55,067.00 =832600*2/3 $ 2,77,533.00 =832600*1/3 Amount $ 73,000.00 Statement of changes Particulars Additions:- Investment earnings Interest income $ 87,600.00 Net decrease in fair value of investments $ -14,600.00 Total earnings Deposits from other governments:- Deposits from School district $4,39,200.00 Deposits from Town of Bairdsville $3,20,400.00 Total Deposits Total Additions Deductions Change in Net position Add: Net position beginning balance Net position Ending Balance $ 7,59,600.00 $ 8,32,600.00 $ 8,32,600.00 $ 21,90,000.00 =1460000+730000 $ 30,22,600.00