The Evangelical Private School follows FASB standards of accounting and reporting. Record the following transactions during the year ended June 30, 2012.
1. Cash contributions were received as follows: ( a ) $1,200,000 for any purpose desired by the school, ( b ) $500,000 for salary supplements for school faculty, ( c ) $300,000 to be used during the next fiscal year in any manner desired by the school, ( d ) $600,000 for the construction of a new auditorium, and ( e ) $700,000 to be invested permanently, with the income to be used as desired by the school. The school’s policy is to record all restricted gifts as temporarily restricted and then reclassify when the restriction is lifted.
2. The school expended $400,000 of the $1,200,000 mentioned in 1( a ) for school furniture. Record the plant as unrestricted.
3. The school expended the $470,000 for salary supplements as directed by the donor in 1( b ) .
4. The $300,000 in 1( c ) was retained for use next year, as directed by the donor.
5. $650,000 was expended for the construction of the new auditorium. School policy is to record all plant as unrestricted.
6. The $700,000 mentioned in 1( e ) was invested permanently, as directed by the donor, and in the year ended June 30, 2012, earned $16,000, none of which was expended.