Exercise 8 LO 10 VHWO, journal entries. Record thefollowing events of Mayo Healt
ID: 2521749 • Letter: E
Question
Exercise 8 LO 10 VHWO, journal entries. Record thefollowing events of Mayo Health nal entries. Record the following events of Mayo Health Clinic, a VHWO: 1. In her will, a leading citizen left a bequest of $400,000 to the clinic. Stipulations were that the amount was to become the corpus of a permanent endowment. Any income received s of principal, with the remaining revenue to be used for an educational program on mental problems. The total amount was received and invested in would be used first to cover any los 2. Three months later, half of the bond investment was sold at 101, plus $5,000 of accrued interest. 3. The remaining endowment bond investments earned $15,000. 4. At year- end, the remaining endowment bond investments have a fair value of $207,000.Explanation / Answer
Date
Account titles and explanations
Debit ($)
Credit ($)
1
Bank
400000
Corpus fund
400000
(Being bequest received from a client and transferred to corpus fund)
1
10% Municipal bond
400000
Bank
400000
(Being investment made on 10% Municipal bond)
2
Bank
207000
202000
10% Muncipal bond
200000
Interest
5000
Profit and loss Account {207000 - (200000 + 5000)}
2000
(Being half of the bond sold along with interest)
3
Bank
15000
Interest
15000
(Being interest received)
4
10% Municipal bond (207000 - 200000)
7000
Profit and loss account
7000
(Being investment recorded at fair value)
Interest (5000+15000)
20000
Profit and loss account
20000
(Being the interest received credited to profit and loss account)
Date
Account titles and explanations
Debit ($)
Credit ($)
1
Bank
400000
Corpus fund
400000
(Being bequest received from a client and transferred to corpus fund)
1
10% Municipal bond
400000
Bank
400000
(Being investment made on 10% Municipal bond)
2
Bank
207000
202000
10% Muncipal bond
200000
Interest
5000
Profit and loss Account {207000 - (200000 + 5000)}
2000
(Being half of the bond sold along with interest)
3
Bank
15000
Interest
15000
(Being interest received)
4
10% Municipal bond (207000 - 200000)
7000
Profit and loss account
7000
(Being investment recorded at fair value)
Interest (5000+15000)
20000
Profit and loss account
20000
(Being the interest received credited to profit and loss account)
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