Assignment 1

Accounting

A NNO obtained cash for the acquisition of land and a building as follows:

Loan proceeds $1,600,000

Contributions 2,400,000
The land and building are acquired for $4,000,000. Payment of $400,000 is made on the loan
principal, plus interest of $100,000. Depreciation expense on the building is $200,000.

Prepare all appropriate entries on the NNO’s records, assuming the NNO is

A. Saint Helen’s University

Unexpended Plant Fund

Investment in Plant Fund

Funds for Retirement of Indebtedness

Investment in Plant Fund

B. United Methodist Hospital
Plant Replacement and Expansion Fund

General Fund

C. United Way of Greater Mountebank

Plant Fund
Answer:

A.
Unexpended Plant Fund
Cash 4,000,000
Notes Payable 1,600,000
Revenue – Contributed – Restricted 2,400,000
Land and Building 4,000,000
Cash 4,000,000
Fund Balance – Restricted 2,400,000
Notes Payable 1,600,000
Land and Building 4,000,000
Investment in Plant Fund
Land and Building 4,000,000
Notes Payable 1,600,000
Net Investment in Plant 2,400,000
Funds for Retirement of Indebtedness
Fund balance – Restricted 400,000
Interest Expense 100,000
Cash 500,000
Investment in Plant Fund
Notes Payable 4,000,000
Net Investment in Plant 4,000,000
Depreciation Expense 200,000
Accumulated Depreciation 200,000
B.
Plant Replacement and Expansion Fund
Cash 2,400,000
Revenue – Contribution – Restricted 2,400,000
Fund Balance 2,400,000
Cash 2,400,000
General Fund
Cash 1,600,000
Notes Payable 1,600,000
Land and Buildings 4,000,000
Cash 1,600,000
Fund Balance 2,400,000
Interest Expense 100,000
Notes Payable 400,000
Cash 500,000
Depreciation Expense 200,000
Accumulated Depreciation 200,000
C.
Plant Fund
Cash 4,000,000
Notes Payable 1,600,000
Revenue – Contributed – Restricted 2,400,000
Land and Building 4,000,000
Cash 4,000,000
Notes Payable 400,000
Interest Expense 100,000
Cash 500,000
Depreciation Expense 200,000
 Accumulated Depreciation 200,000
Unexpended Fund Balance 1,800,000
Expended Fund Balance
([4,000,000 – 400,000] – [1,600,000 +
200,000]) 1,800,000