Question

Southeastern College began the year with endowment investments of $1,210,000 and $710,000 of restricted cash designated by a donor for capital additions.

1. During the year an additional $502,000 donation was received for capital additions. These funds, together with those contributed in the prior year, were used to purchase 150 acres of land adjacent to the university.
2. An alum contributed $210,000 to the permanent endowment and pledged to provide an additional $420,000 early next year. The cash was immediately invested.
3. By terms of the endowment agreement, interest and dividends received on the investments are restricted for scholarships. Gains or losses from changes in the fair value of the investments, however, are not distributed but remain in the endowment. During the year, $50,000 of interest and dividends were received on endowment investments.
4. At year-end, the fair value of the investments had increased by $7,100.

Required:
Prepare journal entries to record the above transactions assuming:
a. Southeastern College is a public university.
b. Southeastern College is a private university.
  

Answer 1

Solution a) Southeastern college is a public university Gredit 502000 502000 710000 210000 210000 210000 210 OD O Account title & Explanation Debit Restricted cash (cash additions) Non-operating capital grants and gette capital assets 710000 Restricted cash ( capital adds Hons) Restricted cash (Endowment) Non operating additions to premanent - endowment Endowment Investments Restructed cash Restricted cash ( Scholarships) 50000 Non operating Investment Income Endowment Investmente Non operating additions to permanent - endowment b) Southeastern college 19 a portraite university Account title & Exploration Debit Restricted cash 502000 contrebution Revenue Temporarily Restricted Land, Buildings, & Equipment 710000 Restricted cash 50000 7100 7100 Credit 502000 110000

Floooo Reclassification from Temporarily restricted Net Asset 71oooo Reclassification to unrestricted Net Assets 210000 502000 Restricted cash pledges Receivable Contelbution revenue- Premanently Restricted Endowment Investments Restricted cash 712000 210000 210000 50000 50000 Restricted cash (Scholarships) Investment Income - Temporarily Restricted Endowment Investments Investment Income permanently Restricted 7100 7100

Answer 2

All is good except capital asset restriction cash in #2 for both is sum of 710k and 502k= 1212k

Answer 3

On part two is a little mismatch as well #4 210k and 420k as debit credit 630 k #3 restricted cash with donor restrictions same as in #4 at the end