7-6. On July 1, 2008, the City of Belvedere accepted a gift of cash in the amount of $3,000,000 from a number of individuals and foundations and

7-6. On July 1, 2008, the City of Belvedere accepted a gift of cash in the amount of $3,000,000 from a number of individuals and foundations and signed an agreement to establish a private-purpose trust. The $3,000,000 and any additionalgifts are to be invested and retained as principal. Income from the trust is to be distributed to community nonprofit groups as directed by a Board consisting of city officials and other community leaders. The agreement provides that any increases in the market value of the principal investments are to be held in trust; if the investments fall below the gift amounts, then earnings are to be withheld until the principal amount is reestablished.a. The following events and transactions occurred during the fiscal year endedJune 30, 2009. Record them in the Belvedere Community Trust Fund.(1) On July 1, the original gift of cash was received.(2) On July 1, $2,000,000 in XYZ Company bonds were purchased atpar plus accrued interest. The bonds pay an annual rate of 6 percentinterest semiannually on April 1 and October 1.(3) On July 2, $950,000 in ABC Company common stock was purchased.ABC normally declares and pays dividends semiannually, onJanuary 31 and July 31.(4) On October 1, the first semiannual interest payment was receivedfrom XYZ Company. Note that part of this is for accrued interest dueat the time of purchase; the remaining part is an addition that may beused for distribution.(5) On January 31, 2009, a cash dividend was received from ABCCompany in the amount of $19,000.(6) On March 1, the ABC stock was sold for $960,000. On the same day,DEF Company stock was purchased for $965,000.(7) On April 1, the second semiannual interest payment was receivedfrom XYZ Company.(8) During the month of June, distributions were approved by the Boardand paid in cash in the amount of $95,000.(9) Administrative expenses were recorded and paid in the amount of$12,000.00 (10) An accrual for interest on the XYZ bonds was made as of June 30, 2009.(11) As of June 30, 2009, the fair value of the XYZ bonds, exclusive ofaccrued interest, was determined to be $2,002,000. The fair value ofthe DEF stock was determined to be $960,000.(12) Closing entries were prepared.