Question: January 10 20X8 Lumbee State College received a 100 000 government grant

January 10, 20X8—Lumbee State College received a $100,000 government grant to be used to finance a study of the effects of the Tax Reform Act of 20X6 on the regional economy.
During 20X8—Expenditures of $72,000 were incurred and paid on the research project.

a. Record these transactions in the accounts of Lumbee State College, and explain how the effects of the transactions should be reported in the college’s financial statements.
b. Repeat requirement (a) under the assumption that the grant was to finance plant expansion.

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