E13.5 Reporting Promises

At the beginning of 2020, the Museum of History receives a documented promise to contribute $20,000 at the end of each year for the next four years. The appropriate discount rate is 3 percent, and the promise is considered fully collectible. At the end of 2020, the museum receives the first payment.

Required

Prepare journal entries to record the promise and the first year's contribution. If the museum's net assets are affected, indicate the appropriate category of net assets.