On January 1, Forrester County is holding investments for Tinsel Town valued at $500,000 in an investment pool, accounted for in an investment trust fund. On January 1, Valley School District invests $1,500,000 in the pool. Earnings on pooled investments for the six months ended June 30 totaling $300,000 were received in cash.1) What percentage interest in the pool is held by the town and the school district?2) (a) Show the entry in the Investment Trust Fund to record the School District's investment in the pool. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)(b) Show the entry in the Investment Trust Fund to summarize the collection of interest for the six-month period. (If no entry is required for a transaction/event,
select "No Journal Entry Required" in the first account field.)(c) Show the entry in the Investment Trust Fund to record the distribution of the interest earned on pooled investments, assuming that the interest will be reinvested by the town and school district. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
What will be an ideal response?
1) The town's interest in the pool is 25% ($500,000 / [$500,000 + $1,500,000]); the school district's interest is 75%.
| FORRESTER COUNTY |
| INVESTMENT TRUST FUND |
| GENERAL JOURNAL |
| ? | ? | Debits | Credits |
| 2(a) | CASH 1,500,000 | 1,500,000 | ? |
| ? | ADDITIONS-DEPOSITS IN POOLED INVESTMENTS-VALLEY SCHOOL BOARD DISTRICT | ? | 1,500,000 |
(b) | CASH | 300,000 | ? |
| ? | UNDISTRIBUTED EARNINGS ON POOLED INVESTMENTS | ? | 300,000 |
(c) ? | UNDISTRIBUTED EARNINGS ON POOLED INVESTMENTS | 300,000 | ? |
| ? | ADDITIONS-DEPOSITS IN POOLED INVESTMENTS-VALLEY SCHOOL DISTRICT | ? | 225,000 |
| ? | ADDITIONS-DEPOSITS IN POOLED INVESTMENTS-TINSEL TOWN | ? | 75,000 |
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