On May 1,the City of Dustin was notified of approval of a $300,000 federal operating grant,payable on a reimbursement basis as the city expends resources for the intended purpose of the grant.As of May 1,no expenditures had been made for grant purposes.The journal entry to record approval of this grant will include:
A) A credit to Revenues in the amount of $300,000.
B) A credit to Deferred Inflow of Resources- Grant Proceeds in the amount of $300,000.
C) A debit to Grants Receivable in the amount of $300,000.
D) No journal entry will be made until expenditures for the authorized purpose occur.

Question

Quizplus · Accepted Answer

No journal entry is made upon approval of the grant because it is a reimbursement grant, meaning the city must first incur expenses before recognizing any receivable or revenue.

On May 1,the City of Dustin Was Notified of Approval