On July 1, 2011, the Morgan County School District received a $30,000 gift from a local civic organization with the stipulation that, on June 30 of each year, $2,000 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.
a. Record the following transactions on the books of the Civic Scholarship Fund: (1) On July 1, 2011, the gift was received and immediately invested. (2) On June 30, 2012, $3,000 of the principal was converted into cash. In addition, $1,800 of interest was received. (3) On June 30, the $4,800 was awarded to Ann Korner, 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 Assets for the Civic Scholarship Fund for the Year Ended June 30, 2012.