The American Society of Goodwill, a political think tank, was recently established. During its first year...

The American Society of Goodwill, a political think tank, was recently established. During its first year of operations it engaged in the following transactions and was affected by the following events:

1. It received a $10,000,000 endowment contribution, all in stocks and bonds.

2. It received $3,000,000 in additional contributions, all restricted for its educational programs and $2,300,000 in unrestricted contributions.

3. It acquired $800,000 in furniture, fixtures, and equipment, all of which have an expected useful life of 10 years.

4. It recognized depreciation on the furniture, fixtures, and equipment, purchased earlier in the year.

5. It spent $2,400,000 on educational programs.

6. It earned $300,000 in interest and dividends on its endowment investments.

7. By year-end the value of its investments had appreciated by $600,000.

8. It incurred $1,300,000 in adminstrative expenses.

9. New year-end it received a pledge of $4,500,000 to be fulfilled in three annual installments of $1,500,000 beginning in one year. The Association determined that a discount rate of 6 percent was appropriate.

(A) Prepare journal entries to record these events and transactions. Be sure to indicate the fund-type in which the entry would be made.

Expert Solution

Journal entries

Date	Particulars	Debit ($)	Credit ($)
	Stock and bond	10000000
	Endowment fund		10000000
	(Being stock and bond received as endowment contribution)

	Bank (3000000 + 2300000)	5300000
	Educational fund		3000000
	General fund		2300000
	(Being restricted and unrestricted funds received)

	Furniture, fixture and equipment	800000
	Bank		800000
	(Being furniture, fixture and equipment purchased)

	Depreciation (800000 /10)	80000
	Furniture, fixture and equipment		80000
	(Being depreciation charged)

	Income and Expenditure account	80000
	Depreciation		80000
	(Being depreciation adjusted against general fund)

	Educational fund	2400000
	Bank		2400000
	(Being fund used for educational purposes)

	Bank	300000
	Endowment fund		300000
	(Being income earned from endowment investment)

	Income and Expenditure account	600000
	Appreciation in endowment fund		600000
	(Being appreciation in endowment fund value is credited)

	Appreciation in endownment fund	600000
	Endowment fund		600000
	(Being endowment fund appreciated)

	Administrative expenses	1300000
	Bank		1300000
	(Being administrative expenses incurred)

	Income and Expenditure account	1300000
	Administrative expenses		1300000
	(Being administrative expenses charged)

	Bank	4500000
	Pledge		4500000
	(Being Pledge received)

	Pledge	1500000
	Bank		1500000
	(Being first instalment paid)

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