Food Services (FS) collects food for distribution to people in need. During November 2013, its first month of operations, the organization collected a substantial amount of food and also $54,000 in cash from a very wealthy donor. The donor specified that the money was to be used to pay down a loan that the organization had with the local bank.
The loan had been taken out to buy land, on which the organization plans to build a warehouse facility. A warehouse is needed since, although the organization does not plan to keep a lot of food in stock, sorting and distribution facilities are crucial. FS has also received $100,000, which according to the donor is to be invested and maintained, with any income earned to be used as FS sees fit.
Required
-Prepare the journal entries that FS would make assuming that it uses the deferral method of accounting and does not maintain separate funds.
-Prepare the statement of financial position after the transactions have occurred.