The Following Information Is Available About the Operations for a Private,not-For-Profit

question 24

Essay

The following information is available about the operations for a private,not-for-profit university.
1.The university sold $20,000,000 of 5% bonds to finance the construction of a new building for the business school.The bonds were sold on January 1 and pay interest on December 31 of each year.The bonds were sold at par and mature in 20 years.
2.The university received $7,500,000 cash in alumni and corporate donations for the new business school building.
3.The building was constructed at a total cost of $22,000,000 and the contractor was paid in full.
4.Interest was paid on the bonds.
5.Depreciation on the new building the first year was $275,000.
Required:
Prepare the appropriate journal entries for the university for these transactions.

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Definitions:

Retained Earnings

The portion of a company's profits that is not distributed as dividends to shareholders but is kept within the company for reinvestment.

Restriction/Appropriation

The limitation of retained earnings distribution specified by management or shareholders, often for specific purposes like future investments or debt repayment.

Stockholders' Equity

Refers to the residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest in the company.

Par Common Stock

Common stock issued with a nominal value per share, which represents the minimum legal capital that must be paid per share.