In a prior year, United Charities received a $100,000 gift to be used to acquire vans to provide transportation for physically challenged adults.During the current year, United acquired two vans at a cost of $60,000 each.The appropriate entry(ies)to record the acquisition should be

Question

Quizplus · Accepted Answer

The donation was restricted for the acquisition of vans, so the funds need to be released from restriction. The entry in the restricted fund would be Resources Released from Restriction and Cash, totaling $100,000. In the unrestricted fund, the entry would be to record the fixed assets purchased, which total $120,000, and to record the cash spent on the acquisition, which is $20,000.

In a Prior Year, United Charities Received a $100,000 Gift