On July 1, 2019, the Morgan County School District received a $40,000 gift from a local civic organization with the stipulation that, on June 30 of each year, $2,500 plus any interest earnings on the unspent principal be awarded as a college scholarship to the high school graduate with the highest academic average. A private-purpose trust fund, the Civic Scholarship Fund, was created.
Required:
a. Record the following transactions on the books of the Civic Scholarship Fund:
1. On July 1, 2019, the gift was received and immediately invested.
2. On June 30, 2020, $2,500 of the principal was converted into cash. In addition, $3,500 of interest was received.
3. On June 30, the $3,500 was awarded to a student who had maintained a 4.0 grade point average throughout each of her four years.
4. The nominal accounts were closed.
b. Prepare a Statement of Changes in Fiduciary Net Position for the Civic Scholarship Fund for the year ended June 30, 2020.
