Use the information to complete the required steps in the box below.

The Smith-Jones Society entered into the following transactions in 2018.

Part 1

1. April 1: Purchased equipment with donor-restricted resources for $47,000. The equipment has a 5-year useful life and no salvage value; it was used throughout the rest of the year.

July 1: Issued $10,025,000 of 10%, 20-year bonds at par to finance construction of a major building addition.

During 2018: $850,000 of contributions restricted to use to service the bonds were received. Bond interest is due each June 30 and December 31.

October 31: Sold machinery for $18,000 halfway through its 6-year useful life. The machine originally cost $24,000 and was expected to have an $8,000 salvage value. (Assume straight-line depreciation.)

December 31: The first semiannual interest payment on the bonds was made. (Record all required adjustments as well as the interest payment.)

Required Steps

Prepare all entries required on the preceding dates to record these transactions, assuming that the Smith Jones Society is a nongovernment Other Non Profit Organization (ONPO) and that December 31 is the end of the fiscal year.

Part 2

John Smith, a noted philanthropist, donated $3,000,000 to the Peoria Community Center with the stipulation that the first 10 years of earnings be used to endow specific programs of the organization. At the end of the 10-year period, half of the principal of the gift will become available for unrestricted use and half for capital additions.

Required Steps

1. Assume that the Peoria Center is a nongovernment A Voluntary Health and Welfare Organization (VHWO).
   1. Prepare the entry(ies) to record the gift.
   2. Prepare the entry(ies) to record the expiration of the term of the endowment.
2. Describe how this gift should be reported in the Statement of Activities:
   1. When received.
   2. When the term expires.