The following events occurred as part of the operations of Kronke Private University for the year 2018 (all amounts are in 000’s):
a. To construct a new business building, the university floated at par a $20,000,000, 8% serial bond issued on July 1. Interest is to be paid on December 31 and June 30. In addition, contributions from the community specifically for the new building totaled $5,000,000.
b. Payments for construction to date total $7,000,000.
c. Interest payments are made on December 31.
d. Construction of the building is completed at an additional cost of $18,000,000. Payment is made for $16,000,000; the balance will be paid in one year under a retained percentage agreement. Institutional policy is to release donor restrictions when assets are placed in service.
e. The first bond serial payment of $2,000,000 plus interest is paid on December 31.
f. A gift of land and a building was received, appraised at $200,000 and $350,000, respectively. The gift was made on the condition that the university assumes a $90,000 mortgage on the property. The university assumed the mortgage.
g. Pledges with a present value of $200,000 to be paid over the next five years were received. The funds will be restricted for remodeling the building received in item (f). It is estimated that $20,000 of the pledges will not be collected.
h. A donation of $500,000 of stock was made by a wealthy citizen. The stock cannot be sold for five years. After the 5-year period, the stock can be sold, and any proceeds are to be used to finance campus construction projects.
i. Dividends of $10,000 on the stock in item (h) were received and were also restricted for construction projects.
j. Depreciation on the building received in item (f) totaled $25,000.
Required
1. Prepare journal entries to record these events for Kronke Private University. Assume that fund accounting is not used.
2. Prepare a statement of activities for the period ended June 30, 2018.