Question: (Complete cycle-Permanent Fund) Dr. Theodore Dough made a $500,000 gift to the Village of Radnor. Dr. Dough stipulated that the corpus of the gift (together with all investment gains and losses) was to remain intact in perpetuity and that all earnings on the investments (after paying expenses for administering the gift) were to be used solely for the purchase of books by the Teddy Library Special Revenue Fund. Record the following transactions in the Dough Permanent Fund, and prepare the required fund financial statements for the year ended December 31, 2012.
1. Dough donated $500,000 to the Village of Radnor.
2. The entire gift was immediately invested in various securities.
3. The investments earned $30,000 in dividends and interest during the year.
4. The Permanent Fund paid the village $2,000 for administrative expenses.
5. In accordance with the terms of the gift, $25,000 was sent to the Teddy Library Special Revenue Fund.
6. At year-end, the investments held by the Permanent Fund had a fair market value of $508,000.