Question

1. Journalize the following transactions on the books of a private college. All of the transactions are for the year 2015 (Provide a brief explanation for each journal entry)

(a) The College received $300,000 in funds that were pledged in 2014, half will be used for unrestricted purposes in 2015. The rest cannot be spent until 2016.

(b) The College was awarded $750,000 in grants that are to be used for restricted research purposes. $510,000 in cash was received, and $620,000 was expended on these projects.

(c) On Dec. 1, the College received a pledge of $5,000,000 to build a new basketball arena. The funds were not expended or received in 2014, but are expected to be received early in 2015.

(d) The fraternity brothers of Delta Tau Delta serve as volunteer tour guides to prospective students on “Open House” Day. Delta Tau Delta estimates that the fraternity brothers did about $2,000 worth of volunteer work.

Answer 1

Following are the Journal Entries

a. Account Receivables a/c Dr. $300,000

To Cash/Bank a/c $150,000

To Revenue a/c $150,000

(Being half of Pledged amount is used for unrestricted purposes)

b. Research Expenses a/c Dr.   $750,000

To Expense Payable a/c    $750,000

(Being research expenses incurred)

Cash a/c Dr. $510,000

To Grant revenue a/c $510,000

   (Being grant amount received)

Grant revenue a/c Dr. $620,000

To Cash a/c $620,000

(Being amount expensed)

c. Account Receivables a/c Dr. $500,000

To Expense Paybale a/c $150,000

(Being pledged amount to be spent in 2015)

d. Cash/Bank a/c Dr. $2,000

To  Tour Services a/c    $2,000

(Being $2,000 expectd to be received by volunteer work)