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Question 5

Journal Entries for Contributions

Dunning College, a private college in northern Idaho, receives the following donations:

1. A parent of a current accounting student contributes $5 million with the stipulation that the donation be used to partially fund a new building for the business school. The college does not know whether it can accumulate enough additional resources to go ahead with the project.

2. An accounting alumnus contributes $500,000 to the accounting department. The alumnus stipulates that the contribution be held in pperpetuity, and any investment income be used to fund a speaker series on current accounting issues. The college invests the $500,000 in securities, and reports cash investment income of $15,000. The $15,000 will be used to fund speaker transportation and fees next year. The investments are worth $510,000 at year-end.

3. A retired recruiter from a local CPA firm notifies the college that her will states that $1 million of her estate be paid to the accounting department of the college, with no restrictions on use.

4. A student donates a van valued at $20,000, specifying that the van be used to transport disabled students from their dorms to class.

5. The van in item 4. depreciates by $3,000.

6. Alumni and friends contribute $6 million to the college. The colleges board of directors sets aside $300,000 of these contributions for repairs to the administration building.

Required

For each of the above items, prepare the appropriate journal entry or entries. For accounts shown on the statement of activities, indicate the category of net assets affected.

HINT: Not all transactions require journal entries. If a transaction does not require a journal entry, select "N/A (no entry)" as your journal entry answers for the transaction.

General Journal
Ref.	Description		Debit	Credit
1.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
2.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record the receipt of the contribution.
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record investment in securities.
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record the investment income.
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record change in fair value of investments.
3.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
4.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
5.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record reclassification of net assets.
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record depreciation for the year.
6.	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record receipt of contributions.
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	AnswerAccumulated depreciationCashContributions-restrictedContributions-unrestrictedDepreciation expenseEquipmentInvestment in securitiesInvestment income-restrictedInvestment income-unrestrictedNet assets released from restrictions-restrictedNet assets released from restrictions-unrestrictedRefundable contributionsRestricted cashUnrealized loss on investment-unrestrictedN/A (no entry)		Answer	Answer
	To record allocation of contribution for repairs.

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