Record the Following Transactions on the Books of Franklin College

question 53

Essay

Record the following transactions on the books of Franklin College, a private college. All of the transactions are for the year 2009.
(a) The College received $450,000 in funds that were pledged in 2008, to be used for unrestricted purposes in 2009.
(b) The College was awarded $900,000 in grants that are to be used for restricted research purposes. $600,000 in cash was received and $580,000 was expended on these projects.
(c) On Dec. 1, the College received a pledge of $2,300,000 to build a new basketball arena. The funds were not expended or received in 2009, but are expected to be received early in 2010.
(d) The College had received cash of $500,000 in 2008 to be used to purchase computer equipment for the student labs. The equipment was purchased and put into service in early January 2009. The equipment has a five-year life and the College follows the practice of maintaining the balance of fixed assets (net of depreciation) in the temporarily restricted net asset category.
(e) On Dec. 31, the College received an unrestricted pledge to receive $100,000 per year each year for six years, beginning on December 31, 2009. The first installment of $ 100,000 was received on that date. The discount rate is 6%. The present value of six payments of $100,000 is $521,240.

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Definitions:

Minor

A person under the age of majority, legally considered incapable of making certain decisions and contracts on their own behalf.

Ratify

To formally approve or confirm an agreement or treaty, making it officially valid.

Enforceable

Capable of being imposed or upheld by legal means or action.

Statutory Law

Laws enacted by a legislative body, such as Congress or a state legislature.