Reference no: EM132680635

Community Assist for Refugees (CAR) is a not-for-profit organization that assists refugees with various services including language and cultural training, transportation, a food bank, and translation services. Some selected transactions for CAR are presented below.

a) CAR received a $5,000 cheque from a local radio station. The letter that came with the donation says that it can be used by CAR on whatever is most urgent.

b) CAR received a $10,000 donation from the Literacy Fund for a homework assistance project. The project is expected to start in a few months.

c) CAR received a $25,000 endowment contribution from Dr. Koe for a scholarship fund.

d) CAR received a donation of 50 student desks for its homework assistance project from City Office Supplies Ltd. The desks are valued at $10,000 and are expected to last 10 years.

e) The city donated a tract of land, valued at $30,000 to CAR. CAR plans to raise funds to construct a new centre on the land.

f) Assume that the homework assistance program is underway. The $10,000 donation in part (b) has been spent on materials and a part-time instructor.

g) Assume that at the end of the year, the endowment contribution in part (c) earned $500 in interest. Dr. Koe had specified that interest must be spent on future scholarships. CAR will wait until there is at least $2,000 in accumulated interest before distributing any scholarships.

h) At the end of the year, CAR records depreciation on the desks, using the straight-line method.

Required:

Problem 1: Prepare journal entries to record the above transactions on CAR's books using

i) the deferral method, and
ii) the restricted fund method.