Bright School Is a Private School Operating as a NFP

question 12

Essay

Bright School is a private school operating as a NFP with a fiscal year end of December 31, 20X8. Bright School has an endowment fund and an operating fund. Earnings of the endowment fund can only be used to provide scholarships to students in need during the year. In any year that the full earnings are not paid out in scholarships, they may be carried forward and used in future years. Scholarships are paid from the operating fund. During the year, the following transactions occurred:
1. The endowment fund earned interest income of $40,000. Only $30,000 was paid out in scholarships in the current year.
2. An additional endowment contribution was received of $750,000 at the end of the year. In this case, earnings on this endowment can only be used to purchase equipment for the science labs in the school.
3. A pledge for an endowment for $350,000 was received in October, 20X8. This arose on the death of a long-time donor who made provisions in their will to leave to the school this endowment contribution. The lawyer handling the estate stated that the funds would be released in early February 20X9 once all of the legal requirements pertaining to the estate had been completed.
Required:
Prepare the journal entries to record the above transactions for the fiscal year-end December 31, 20X8. Bright School uses the deferral method of reporting.

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Definitions:

Bone Density

A measure of the amount of minerals (such as calcium) contained in a certain volume of bone, reflecting its strength and the risk for conditions like osteoporosis.

Aerobic Capacity

The maximum amount of oxygen the body can utilize during a specified period of usually intense exercise, a measure of cardiovascular fitness.

Fat Decreases

A reduction in the amount of adipose tissue in the body, which can be due to diet, exercise, or metabolic factors.

Fatty Deposits

Accumulations of fat within the body, often in specific areas such as the arteries, liver, or around the abdomen, which can impact health.