At the beginning of the current year, Tarrah Waverly gave the Aspen Museum $500,000 in cash, with the provision that the cash be invested in income-producing securities. The museum is to pay Tarrah the income from the investments, defined as dividend and interest income and unrealized gains and losses, for her remaining life. Upon her death, remaining resources become available to the college with no restrictions as to use. The museum invested the $500,000 in securities earning cash dividend and interest income of $15,500 in the current year. The securities have a fair value of $509,000 at the end of the year.
Required
Prepare journal entries to record the life income agreement during the current year. If the account affects net assets, indicate which category of net assets is affected.

Question

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The Answer of At the beginning of the current year, Tarrah Waverly gave the Aspen Museum $500,000 in cash, with the provision that the cash be invested in income-producing securities. The museum is to pay Tarrah the income from the investments, defined as dividend and interest income and unrealized gains and losses, for her remaining life. Upon her death, remaining resources become available to the college with no restrictions as to use. The museum invested the $500,000 in securities earning cash dividend and interest income of $15,500 in the current year. The securities have a fair value of $509,000 at the end of the year.
Required
Prepare journal entries to record the life income agreement during the current year. If the account affects net assets, indicate which category of net assets is affected.

At the Beginning of the Current Year, Tarrah Waverly Gave