Kilmore City Received a Cash Gift of $125,000 from a Citizen

question 44

Essay

Kilmore City received a cash gift of $125,000 from a citizen who specified that the gift must be used to support recreational activities for the city's youth. The city accounted for this gift in the appropriate fund. During the year the city engaged in the following activities.
REQUIRED:
Prepare the appropriate journal entries. Be sure to indicate in which fund the entries should be recorded.
a) The city accepted the donation.
b) The city engaged in a fund-raising effort to provide additional funds to support youth recreational activities and raised $6,000 in pledges. The city collected $2,000 in cash with the remaining pledges collectible shortly after the end of the year.
c) The city temporarily invested $50,000 of the gift in marketable securities.
d) The city spent $26,000 on goal posts, nets, etc., for a soccer field.
e) The city received $2,000 in dividends and interest earned on the temporary investment.
f) At year-end the temporary investments had a market value of $51,000.
g) The city closed the revenue and expense accounts.

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