Question
On January 1, 2018, Muscat City receives an OMR 360,000 donation from a private company, that operates in Muscat. The terms of the trust agreement
On January 1, 2018, Muscat City receives an OMR 360,000 donation from a private company, that operates in Muscat. The terms of the trust agreement specify that the city is to use about OMR 160,000 each year for the next two years to help economically weaker sections to get food and medical support. Muscat city accepts the donation and, as allowed by the trust agreement, invests OMR 50,000 in highly rated bonds. The trust agreement also allows Muscat city to deduct OMR 3000 for office expenses and managing the trust fund. At the end of the year, the fair value of the bonds increased to OMR 58,000. Considering the above case, if the trust fund has spent OMR 3,000 for office staff who are involved in managing the fund, the appropriate journal entry shall be:
a- Dr: Administration cost OMR 3,000 and Cr: Cash OMR 3,000
b-Dr: Cash OMR 3,000 and Cr: Deductions- administrative costs OMR 3,000
c-Dr: Deductions- administration costs OMR 3,000 and Cr: Cash OMR 3,000
d-None of them
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