Question

Southeastern College began the year with endowment investments of $1,290,000 and $780,000 of restricted cash designated by a donor for capital additions.

1. During the year an additional $508,000 donation was received for capital additions. These funds, together with those contributed in the prior year, were used to purchase 150 acres of land adjacent to the university.
2. An alum contributed $280,000 to the permanent endowment and pledged to provide an additional $500,000 early next year. The cash was immediately invested.
3. By terms of the endowment agreement, interest and dividends received on the investments are restricted for scholarships. Gains or losses from changes in the fair value of the investments, however, are not distributed but remain in the endowment. During the year, $58,000 of interest and dividends were received on endowment investments.
4. At year-end, the fair value of the investments had increased by $7,700.

Required:
Prepare journal entries to record the above transactions assuming:
a. Southeastern College is a public university.
b. Southeastern College is a private university.
  

Answer 1

Answer:

a.)

Date	Particulars	Debit ($)	Credit ($)
1	Cash	508000
	Capital Investment fund - Restricted		508000
	(To record receipt additional capital for restricted fund)
2	Investment in land	1290000
	Cash		1290000
	(To record investment in land)
3	Cash	280000
	Endovment Fund - Unrestricted		280000
4	Investment - Endowment fund unrestricted	280000
	Cash		280000
	(To record invesrtment made out of endowmentr fund)
5	Investment fund - Endowment fund unrestricted	58000
	Interest and dividend		58000
	(To record interest and dividend received)
6	Contribution receivable	500000
	Endowment fund unrestricted		500000

b.)

Date	Particulars	Debit ($)	Credit ($)
1	Cash	508000
	Capital Investment fund - Permanently Restricted		508000
	(To record additional capital for restricted fund)
2	Investment in land	1290000
	Cash		1290000
	(To record investment in land)
3	Cash	280000
	Endovment Fund - Unrestricted		280000
4	Investment - Endowment fund unrestricted	280000
	Cash		280000
	(To record invesrtment made out of endowmentr fund)
5	Investment fund - Endowment fund unrestricted	58000
	Interest and dividend		58000
	(To record interest and dividend received)