Do-Good Inc. is a newly formed not-for-profit organization. On January 1, 2012, its first day of operations, Do-Good purchased equipment costing $8,000. The equipment is estimated to have a useful life of 4 years, with no residual value at that time. This transaction was the only transaction that took place to date. The equipment was purchased from an unrestricted contribution of $8,000. What would be the balance in the General Fund on December 31, 2012?

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The equipment is depreciated over its useful life. With a useful life of 4 years, the annual depreciation is $2,000 ($8,000/4). Therefore, the balance in the General Fund after one year would be $8,000 (initial contribution) - $2,000 (depreciation) = $6,000. However, since the equipment was purchased from an unrestricted contribution, the depreciation expense does not affect the General Fund balance, which remains at $0.