Open a general journal for the City of Monroe Community Foundation Trust Fund and record the following transactions for the year ending December 31, 2017: (1) On May 1, the first semiannual interest payment was received on the corporate bonds. The bonds pay 6 percent annual interest, semiannually on May 1 and November 1. (2) During the first half of the year, additional contributions from individuals and foundations amounted to $205,500, in cash. From these funds, $ 200,000 were invested in RST Corporation stock on June 15. (3) On November 1, the second semiannual interest payment was received from the investment in bonds.

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abdulmajeedabiodunac abdulmajeedabiodunac · Answer 1 · 2020-04-17T09:21:42+02:00

Answer:

The beginning part of the question is found below:

The City of Monroe Scholarship Foundation private-purpose trust fund had the following account balances on January 1, 2017:

Debits Credits

Cash $49,500

Accrued Interest Receivable $7,500

Investments in Corporate Bonds $750,000

Net Assets Held in Trust $807,000

Totals $ 807,000 $ 807,000

Find below the necessary journal entries in the explanation section:

Explanation:

The interest received =6%*$750,000*6/12=$22,500

Dr Cash $22,500

Cr Interest income(balance) $15,000

Cr Accrued interest receivable $7,500

Additional funds of $205,500 received:

Dr Cash $205,500

Cr donation income $205,500

the investment of $200,000 in corporation stock

Dr investment in corporation stocks $200,000

Cr Cash $200,000

receipt of half of the year annual interest on bonds(as calculated above at $22,500)

Dr cash $22,500

Cr Interest income $22,500

cash is debited when there is an inflow and credited in case of outflows

The investment account is debited because it is an asset