Will Wealth Made Three Charitable Donations in 2011

question 26

Essay

Will Wealth made three charitable donations in 2011.Each was for $500,000,however they were made to three different organizations as follows:
1.Will donated to a local voluntary health and welfare organization (VHWO),and indicated that the funds could be used as the VHO wanted.
2.Will donated to a local private,not-for-profit university,designating the funds to be used for scholarships and student aid.
3.Will donated to the local not-for-profit,nongovernmental hospital,designating the funds to be used for purchase of diagnostic equipment.
Required:
For each of the above three situations:
A.Prepare the journal entry that each organization would prepare at the time of the contribution.
B.Prepare the journal entry that each organization would prepare at the time of the subsequent spending of the funds.Assume that the spending is in accordance with any restrictions that Will placed on the donation.

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Definitions:

Promissory Note

A monetary tool that carries a formal commitment from one party to another to pay a specific amount of money, either immediately upon request or at a predetermined future time.

Non-interest-bearing

A financial term describing a debt or loan that does not accrue interest over time.

Simple Interest

A method of calculating the interest charge on a loan based on the original principal balance and not on accumulated interest.

T-bill

A short-term government security with maturity periods ranging from a few days to 52 weeks.