Record the following transactions on the books of Calvin College, which follows FASB standards, for Calvin’s fiscal year, which ends on June 30, 2012.
1. During the year ended June 30, 2012, a donor made a cash contribution in the amount of $1,000,000 with the stipulation that the principal be invested permanently and that the income be used for research in biology. The cash was invested.
2. Also during the year ended June 30, 2012, a donor made an unrestricted cash contribution of $500,000. Calvin’s governing board decided to establish this gift as a permanent investment and invested the funds.
3. By the end of the year, the investments mentioned in transaction 1 earned $45,000 and the investments mentioned in transaction 2 earned $22,500; both amounts were received in cash.
4. The fair value of investments in transaction 1 increased by $15,000 at year-end.
5. During the year ended June 30, 2013, the biology research was completed, using the income mentioned in transaction 3.