A citizen group raised funds to establish an endowment for theEastville City Library. Under the terms of the trust agreement, theprincipal must be maintained, but the earnings of the fund are tobe used to purchase database and periodical subscriptions for thelibrary. A preclosing trial balance of the library permanent fundfollows:
| Trial Balance—December 31, 2017 | Debits | | Credits | |
| Cash | $ | 9,000 | | | | | | |
| Investments | | 520,000 | | | | | | |
| Additions to permanent endowments | | | | | $ | 511,500 | | |
| Investment income | | | | | | 49,500 | | |
| Expenditures—subscriptions | | 40,500 | | | | | | |
| Intergovernmental grant | | | | | | | | |
| Net increase in fair value of investments | | | | | | 8,500 | | |
| Accrued interest receivable | | 2,250 | | | | | | |
| Accounts payable | | | | | | 2,250 | | |
| $ | 571,750 | | | $ | 571,750 | | |
|
Required:
a. Prepare any closing entries necessary atyear-end.
b. Prepare a Statement of Revenues, Expenditures,and Changes in Fund Balance for the library permanent fund.
c. Prepare a balance sheet for the LibraryPermanent Fund (Use Assigned to Library for any spendablefund balance).
