Prepare in General Journal Form the Entries Required for Each

question 22

Essay

Prepare in general journal form the entries required for each of the following selected transactions of Northern University,a state-funded public institution engaged only in business-type activities.Some of these transactions are related and some are not.
1)A generous alumnus donated $300,000 that can only be used for research on diabetes.The full $300,000 was received in FY 2011.
2)During FY 2011,expenses of $150,000 were made in cash for diabetes research (see item 1 above).
3)$2,000,000 in long-term bonds was issued to construct a new parking garage on campus.
4)During FY 2011,the parking garage (see item 3 above)was partially completed at a total cash expenditure of $1,800,000.
5)During 2011,interest was paid in the amount of $120,000 on the long-term bonds issued for the parking garage project (see item 3 above).

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Definitions:

Deferred Tax Assets

Financial assets that result from differences between the tax base of assets or liabilities and their carrying amount in financial statements, which will result in deductible amounts in future periods.

Deferred Tax Liabilities

A tax obligation recorded on a company's balance sheet that results from temporary differences between the tax basis of assets or liabilities and their reported amount in the financial statements.

Deferred Tax Assets

Financial items on a company's balance sheet that reduce future tax liability due to temporary differences between the accounting and tax treatment of assets and liabilities.

Deferred Tax Liabilities

Future tax payments owed to tax authorities due to temporary differences between accounting income and taxable income.