Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 19, Problem 7E
To determine
Concept Introduction:
Plant fund transactions of private Universities:
Plant funds consist of several subgroups, each of which is designed to record a certain phase of activity related to fixed assets.
Treatment of given transactions and
Expert Solution & Answer
Answer to Problem 7E
- Receipt of $250,000 to the plant fund
- Contributions of $30,000 restricted for major repairs of university buildings are received
- A partial payment of $50,000 is made on the debt principal.
- Work on the science building addition is completed with a total cost of $220,000. Unpaid contract costs total $35,000.
- Receipt of $25,000 donation form former Olympic medallist
- A building with a fair value of $300,000 was donated to the university by an alumnus.
Depreciation on all assets totalled $75,000.- During a celebration after a basketball victory, $2,000 of gym equipment disappeared.
| Debit $ | Credit $ | |
| Cash | 250,000 | |
| Revenues − Temporarily Restricted Contributions | 250,000 |
Payment of existing debt principal ($50,000) and building an addition to the science building ($200,000).
| Debit $ | Credit $ | |
| Construction in progress | 200,000 | |
| Contract payable | 200,000 |
Payment of existing debt of $50,000
| Debit $ | Credit $ | |
| Accounts payable | 50,000 | |
| Cash | 50,000 |
| Debit $ | Credit $ | |
| Cash | 30,000 | |
| Revenue − Temporarily restricted contribution | 30,000 |
$20,000 is spent for appropriate repairs
| Debit $ | Credit $ | |
| Expenses − Building repairs | 20,000 | |
| Cash | 20,000 |
| Debit $ | Credit $ | |
| Accounts Payable | 50,000 | |
| Cash | 50,000 |
| Debit $ | Credit $ | |
| Construction in progress | 20,000 | |
| Contracts payable | 35,000 | |
| Cash | 55,000 |
| Debit $ | Credit $ | |
| Building | 255,000 | |
| Construction in progress | 255,000 |
| Debit $ | Credit $ | |
| Cash | 25,000 | |
| Revenues − Temporarily Restricted Contributions | 25,000 |
gymnasium equipment costing $25,000 is purchased
| Debit $ | Credit $ | |
| Gymnasium equipment | 25,000 | |
| Cash | 25,000 |
| Debit $ | Credit $ | |
| Building | 300,000 | |
| Revenues − Unrestricted property Contributions | 300,000 |
| Debit $ | Credit $ | |
| Expenses − operation and maintenance of plant (provision for depreciation) | 75,000 | |
| | 75,000 |
| Debit $ | Credit $ | |
| Expenses − loss on theft | 2,000 | |
| Gymnasium equipment | 2,000 |
Explanation of Solution
- The above answer can be explained as plant funds received are treated as temporarily restricted contribution revenue and credited to revenue account, paid for principal debt and for new building construction. Construction in progress account is created and the amount is debited to it
- Contribution received for major building repair received credited to Temporarily restricted contribution and appropriately recognized.
- payment made for payment of debt principal is recognized by debiting accounts payable and credit cash accounts.
- additional cost incurred has been transferred to construction in progress account and contract payable account
- Plant fund received are treated as temporarily restricted contribution revenue and credited to revenue account, the next purchase of gymnasium equipment has been recognized by passing entry.
- When an asset is donated to private university it is treated as an unrestricted contribution and treated accordingly
- Depreciation is treated as operation and maintenance expenses, debited to expenses and credited to accumulated depreciation account
- Loss of asset is expensed out and debited to expenses by recognizing the value of loss in an asset account
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Chapter 19 Solutions
Advanced Accounting
Ch. 19 - Prob. 1UTICh. 19 - Prob. 2UTICh. 19 - Prob. 3UTICh. 19 - Distinguish assets lmited as to use from...Ch. 19 - Prob. 5UTICh. 19 - Prob. 6UTICh. 19 - Prob. 1ECh. 19 - Record the following operating activities: 1....Ch. 19 - Record the following events that affect the loan...Ch. 19 - Prob. 5E
Ch. 19 - Prob. 6ECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Prob. 9ECh. 19 - Prob. 19.1.1PCh. 19 - Prob. 19.1.3PCh. 19 - Prob. 19.1.4PCh. 19 - Prob. 19.1.5PCh. 19 - Prob. 19.1.6PCh. 19 - Prob. 19.1.7PCh. 19 - Prob. 19.1.8PCh. 19 - Prob. 19.1.9PCh. 19 - Prob. 19.1.10PCh. 19 - Prob. 19.2.1PCh. 19 - Prob. 19.2.2PCh. 19 - Prob. 19.2.3PCh. 19 - Prob. 19.2.4PCh. 19 - Prob. 19.2.5PCh. 19 - Prob. 19.2.6PCh. 19 - Prob. 19.2.7PCh. 19 - Prob. 19.2.9PCh. 19 - Prob. 19.2.10PCh. 19 - Prob. 19.4.1PCh. 19 - Prob. 19.4.2PCh. 19 - Prob. 19.5PCh. 19 - Prob. 19.6.1PCh. 19 - Prob. 19.6.2PCh. 19 - Prob. 19.7.1PCh. 19 - Prob. 19.7.2PCh. 19 - Prob. 19.8.1PCh. 19 - Prob. 19.8.2PCh. 19 - Prob. 19.10.1PCh. 19 - Prob. 19.10.2PCh. 19 - Prob. 19.10.3PCh. 19 - Prob. 19.10.4PCh. 19 - Prob. 19.10.5PCh. 19 - Prob. 19.10.6PCh. 19 - Prob. 19.10.7PCh. 19 - Prob. 19.10.8PCh. 19 - Prob. 19.10.9PCh. 19 - Prob. 19.10.10PCh. 19 - Prob. 19.11.1PCh. 19 - Prob. 19.11.2PCh. 19 - Prob. 19.11.3PCh. 19 - Prob. 19.11.4PCh. 19 - Prob. 19.11.5PCh. 19 - Prob. 19.11.6PCh. 19 - Prob. 19.11.7PCh. 19 - Prob. 19.11.8PCh. 19 - Prob. 19.11.9PCh. 19 - Prob. 19.11.10PCh. 19 - The following nominal accounts were extracted from...Ch. 19 - Prob. 19.15P
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