Reference no: EM131704385
Question: (Journal entries for a not-for-profit college) Manny Saxe College is a small, not-for-profit college known for its excellence in teaching accounting. The college uses fund accounting and has an Unrestricted Current Fund, a Restricted CurrentFund, a Plant Fund, and an Endowment Fund. It charges its expenses to Instruction and research, Student services, Plant operations, and Auxiliary enterprises. It had the following transactions and events during 2013. Prepare the journal entries necessary to record these transactions, identifying the net asset classification as appropriate. Show which fund is used to record each transaction.
1. Revenues from student tuition and fees were $2,500,000, all of which was collected.
2. Revenues from auxiliary enterprises were $400,000 in cash.
3. Salaries and wages, all of which were paid, were $1,800,000 million, chargeable as follows:
Instruction and research $1,200,000
Student services 200,000
Plant operations 250,000
Auxiliary enterprises 150,000
4. Materials and supplies costing $800,000 were purchased on account and placed in inventory during the year.
5. Materials and supplies used during the year were $700,000, chargeable as follows:
Instruction and research $300,000
Student services 50,000
Plant operations 150,000
Auxiliary enterprises 200,000
6. A cash transfer of $100,000 was made from the Unrestricted Current Fund to the Plant Fund to start the design work on a new student services building.
7. The college received a cash gift of $20,000 from K. Schermann to finance a 3-year research project on the usefulness of fund accounting.
8. The college paid R. Attmore $7,000 to do research on the project in transaction 7.
9. P. Defliese donated $1,000,000 in equity securities to the college, stipulating that the corpus and all gains and losses on the sale of the securities remain intact in perpetuity. He also stipulated that income on the investments be used solely to finance a chair in governmental accounting.
10. At year-end, the securities donated by Mr. Defliese in transaction 9 had a fair value of $1,030,000. Income earned on the investments during the year was $45,000.
11. Antonio Harmer sent a letter to the college at the end of the year, promising to contribute $25,000 to equip the new student services building if the college raised an equal amount from other contributors. The college planned to write to the alumni to seek additional funds.