a donor made a cash contribution in the amount of $1 million to the City of Augu

Question

a donor made a cash contribution in the amount of $1 million to the City of Augustus to be held as an endowment for the preservation and upkeep of the Indigo Bridge. To account for this endowment, the city has created the Indigo Endowment Fund. Under terms of the agreement, the city must invest and conserve the principal amount of the contribution in perpetuity. Earnings, measured on the accrual basis, must be used to maintain the Indigo bridge. All changes in fair vallue do not affect earnings for transfer purposes . Earnings are transferred periodically to the Indigo Bridge maintenance Fund, a special revenue fund. What entry should be made, and in what fund type to record the initial contriubtion of $1 million?

Explanation / Answer

Journal Entry Date Particulars Dr Amount Cr. Amount Cash                                                                 Dr.           1,000,000 To Indigo Endowmnet Fund          1,000,000 (Fund received for preservation and upkeep of Indigo Bridge)

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