Prepare journal entries (with JE narrative), as necessary to record these events and transactions. Be sure to indicate the type of fund (permanently restricted, temporarily restricted, or unrestricted) that would be affected by the entries.

P. 13-5 A sing! e contribution may aect all three types offundr. The following events and transactions relate to a single contribution. A high-tech rm pledged to contribute $1 million in the company's common stock to a university's business school if the school would establish a new program in the management of information tech nology. The securities were to be placed in an endowment fund, and the annual dividend earnings were to be used to purchase computer hardware and software. The business school established the program and thereby satised the conditions to receive the contribution. The business school received the stock and placed it in an endowment fund. In the rst year after receiving the stock, the business school earned $30,000 in cash dividends. They were credited to an appropriate fund. The business school purchased $20,000 of computer equipment. The computer equipment was estimated to have a useful life of three years (no salvage). The school charged one year's depreciation. Answer: In this given scenario, there is no requirement to record the entry for initial pledge as the recipient business school has a condition to establish a new Information Technology program in management for receiving the contribution. Answer: As the business school satisfied the contribution condition, the pledge will be now recorded as an endowment fund. The receivables would be recorded in the fair market value of the receiving security. Pledge Received Dr. $1,000,00 Cr. 0 Revenue from the Contribution $1,000,000 To Record the Pledged Securities - Permanently Restricted Fund Answer: Dr. Cr. Marketable Securities $1,000,000 Pledged Receivables $1,000,000 To Record the receipt of the pledged securities in the Permanently Restricted Fund Answer: Cash Dr. $30,000 Cr. Dividend Revenue $30,000 To Record the receipt of dividends in the Temporarily Restricted Fund Answer: The capital assets and the expenses must be recorded as unrestricted fund. But before doing so the resources must be released from the temporarily restricted fund and upon doing that it can be recorded as unrestricted fund. Dr. Net Assets released from the Restrictions $20,000 Cash To Record the release of restrictions in the Unrestricted Fund Cr. $20,000 Answer: Dr. $5,000 Cr. Depreciation Expenses Computer Equipment - Allowance for Depreciation $5,000 To Record one year's depreciation on computers in the Unrestricted Fund