We are the World (WATW) is a not-for-profit organization that assists refugees with various services, including language and cultural training, transportation, a food bank, and translation services. Some selected transactions for WATW are presented below.

a. WATW received a $750,000 cheque from a local radio station. The letter that came with the donation says that WATW can use it on whatever needs are most urgent.

b. WATW received a $125,000 donation from the Literacy Fund for a new homework assistance project. The project is expected to start in a few months. c. WATW received a $100,000 endowment contribution from Dr. Pepper for a scholarship

d. WATW received a donation of 5000 student desks for its homework assistance project from City Office Supplies Ltd. The student desks are valued at $175,000 and are expected to last 11 years. e. The city donated a tract of land valued at $400,000 to WATW, which plans to raise funds to construct a new center on the land.

f. Assume that the homework assistance project is underway. The $125,000 in part b. has been spent on materials and a part-time instructor.

g. Assume that the endowment contribution in part c. earned $5,000 in interest at the end of the year. Dr. Pepper had specified that the interest must be spent on future scholarships. WATW will wait until there is at least $15,000 in accumulated interest before distributing any scholarships.

h. At the end of the year, WATW records depreciation on the student desks using the straight line method.

Required:

Prepare the journal entries to record the above transactions on WATW's books using a. the deferral method, and b. the restricted fund method.