Question

Record the following transactions on the books of Benjamin College, a private college. All of the transactions are for the year 2018.
(a) The College received $450,000 in funds that were pledged in 2017, to be used for unrestricted purposes in 2018.
(b) The College was awarded $900,000 in grants that are to be used for restricted research purposes. $600,000 in cash was received, and $580,000 was expended on these projects.
(c) On Dec. 1, the College received a pledge of $2,300,000 to build a new basketball arena. The funds were not expended or received in 2018, but are expected to be received early in 2018.
(d) The College had received cash of $500,000 in 2017 to be used to purchase computer equipment for the student labs. The equipment was purchased and put into service in early January 2018. The equipment has a five-year life and the College follows the practice of maintaining the balance of fixed assets (net of depreciation) in the temporarily restricted net asset category.
(e) On Dec. 31, the College received an unrestricted pledge to receive $100,000 per year each year for six years, beginning on December 31, 2018. The first installment of $ 100,000 was received on that date. The discount rate is 6%. The present value of six payments of $100,000 is $521,240.

Answer 1

ANSWER

Preparing Journal Entries for transactions on the books of Benjamin College, a private college:

Event	General Journal	Debit	Credit
a	Cash	$450,000
	Contributions Receivable		$450,000
	Reclassification from Temporarily Restricted Net Assets-Expiration of Time Restrictions	$450,000
	Reclassification to Unrestricted Net Assets-Expiration of Time Restrictions		$450,000
	(To Record expiration of time restrictions)
b	Grants Receivable	$900,000
	Revenues: Temporarily Restricted-Contributions		$900,000
	Cash	$600,000
	Grants Receivable		$600,000
	Research Programs Expense	$580,000
	Cash		$580,000
	Reclassification from Temporarily Restricted Net Assets-Satisfaction of Program Restrictions	$580,000
	Reclassification to Unrestricted Net Assets-Satisfaction of Program Restrictions		$580,000
	(To Record expiration of Program restrictions)
c	Pledges Receivable	$2,300,000
	Revenues: Temporarily Restricted-Contributions		$2,300,000
d	Equipment (restricted)	$500,000
	Cash		$500,000
	Depreciation Expense	$100,000
	Accumulated Depreciation		$100,000
	Reclassification from Temporarily Restricted Net Assets-Satisfaction of Plant Restrictions	$100,000
	Reclassification to Unrestricted Net Assets-Satisfaction of Equipment Acquisition Restrictions		$100,000
	(To Record expiration of plant restrictions in proportion to depreciation)
e	Pledges receivable	$421,240
	Cash	$100,000
	Revenues:Unrestricted - Contributions		$521,240

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