Question

The trial balance of Farley College, a government university, as of September 1, 20X5, includes the following:

.:.
The following transactions took place during the year:
1. A cash donation of $40,000 was received from an individual for the purpose of financing new additions to the business and public administration building.
2. The money was invested in securities acquired at par.
3. Other cash donations were received as follows:
For retiring indebtedness . . . . . . . . . . . . . . . . . . . . . . . $ 20,000
For plant improvements and renovations . . . . . . . . . . . . . . . 15,000
For plant additions . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
$ 50,000
4. Of the money received in entry 3, $10,000 was used to finance the acquisition of additional equipment.
5. A $1 million addition to the business and public administration building was begun. Expenditures of $600,000 were incurred (and paid) by August 31, 20X1, financed by a loan (note) of $1 million from the Last National Bank pending the receipt of more donations.
6. A total of $13,000 was spent in remodeling an art building classroom.
7. A cash donation of $75,000 was received for the purpose of paying part of the mortgage.
8. A mortgage installment of $35,000 ($10,000 principal and $25,000 interest) became due during the year and was paid from the previous donation.
9. An uninsured piece of equipment costing $5,000 was destroyed. Related accumulated depreciation was $2,000.
10. The provision for depreciation for the year was $270,000 for buildings and $120,000 for equipment.

Required
a. Prepare journal entries for Farley College, as needed, for the 20X5–20X6 fiscal year.
b. Prepare a schedule computing the balance of Net Investment in Capital Assets at the end of the fiscal year.



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  • CreatedOctober 25, 2014
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