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Find the journal entries to record the land transactions

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Question - TGF Care Facility (TGF) is a not-for-profit organization (NFPO) that was established on April 1, 20X6. Its mandate is to provide rehabilitation services to people with spinal-cord injuries. A select list of TGF's transactions during its first year of operations follows.

On June 1, 20X6, the provincial government contributed $1,000,000 to TGF on the condition that the amount be invested in perpetuity. The government did not place any restrictions on the use of the investment income. TGF immediately invested $900,000 of this contribution in a one-year guaranteed investment certificate (GIC). During June 20X6, TGF earned $2,000 of interest on this investment and received a cheque for this amount on June 30, 20X6.

On June 1, 20X6, TGF received a donation of $200,000 cash for the purchase of land. On June 15, 20X6, TGF paid $210,000 cash to purchase an undeveloped parcel of land.

Assume that TGF uses the deferral method to account for contributions and does not disclose separate funds. Find the journal entries to record the land transactions in June 20X6?

a) A net debit to the land account for $200,000

b) A net debit to net assets for $10,000

c) A net credit to deferred contributions for $200,000

d) A net credit to net assets for $200,000

Reference no: EM132727529

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